In a recent payments conference in Sydney, RBA Governor Michele Bullock addressed concerns that Australia might be falling behind in the fight against inflation compared to other countries. Bullock confidently dismissed these claims, asserting that the Reserve Bank of Australia (RBA) is taking a “more cautious” approach to policy tightening. The primary reason for this cautious stance is the desire to preserve the hard-fought gains in the country’s job market.
The RBA does not anticipate inflation returning to its target band of 2% to 3% until late 2025. While markets around the world are starting to brace themselves for potential interest-rate cuts next year, both in Europe and the U.S., the RBA remains relatively hawkish in its stance.
Bullock recently emphasized that the inflation pressures faced by Australia are predominantly home-grown, rather than being linked to global factors. Furthermore, she believes that these pressures do not signify the completion of the tightening cycle.
In light of lower-than-expected inflation figures for October and weak retail sales, the RBA decided to keep its official cash rate unchanged at 4.35% last week. Additionally, recent economic data revealed that the country’s economy grew less than anticipated in the third quarter.
While maintaining vigilance, the RBA strives to strike a balance between combating inflation and ensuring economic stability. The caution exercised by Governor Bullock and her team reflects their careful consideration of various factors influencing Australia’s inflationary environment.