Monetary Policy Statement issued by the Reserve Bank of Australia - November 2024

On Tuesday, the Reserve Bank of Australia decided to keep the interest rate unchanged at 4.35% and did not indicate any imminent changes in monetary policy. The key points included in the monetary policy statement issued by the Reserve Bank of Australia are:

• Core inflation remains extremely high.
• The Reserve Bank of Australia does not expect inflation to return sustainably to the target midpoint until 2026.
• The labor market remains tight, with strong demand for workers.
• The Reserve Bank of Australia will continue to rely on data and evolving risk assessment.
• Policy will need to be sufficiently restrictive until the Reserve Bank of Australia is confident that inflation is sustainably moving towards the target range.
• While headline inflation has significantly declined and will remain low for some time, core inflation indicates stronger inflation momentum and remains extremely high.
• The Reserve Bank of Australia does not rule out any outcome, either domestically or externally.
• GDP growth has been weak.
• A range of indicators suggests that labor market conditions remain tight.
• Taking into account the recent data and updated forecasts, the Reserve Bank of Australia assesses that monetary policy is currently restrictive and is operating broadly as expected.
• Wage pressures have eased somewhat, but labor productivity remains at levels only seen in 2016, despite improvements over the past year.
• Demand still outstrips supply, though the gap is narrowing.
• Core inflation remains high, and inflation in services is expected to decline only gradually.
• Household consumption has increased less than expected and is likely to remain stable in the third quarter.
• Monetary policy in Australia is not as restrictive as most of its peers, even after recent interest rate cuts abroad.
• The Reserve Bank of Australia has downgraded its forecasts for GDP growth and household consumption and cut its expectations for the Consumer Price Index and core inflation.
• The Reserve Bank of Australia expects the overall Consumer Price Index inflation rate to reach 2.6% in December, 2.5% in June 2025, 3.7% in December 2025, and 2.5% in December 2026.
• The Reserve Bank of Australia expects average core inflation to be 3.4% in December, 3.0% in June 2025, 2.8% in December 2025, and 2.5% in December 2026.
• The Reserve Bank of Australia expects GDP growth of 1.5% in December, 2.3% in December 2025, and 2.2% in December 2026.
• The Reserve Bank of Australia expects the unemployment rate to be 4.3% in December, 4.5% in December 2025, and 4.5% in December 2026.
• The Reserve Bank of Australia has revised its employment growth forecasts to 2.6% in December and 2.2% in June 2025, slowing to 1.3% by the end of 2026.
• The Reserve Bank of Australia expects wage growth of 3.4% in December, 3.2% in December 2025, and 3.1% in December 2026.
• It is challenging to maintain current wage growth levels without increasing productivity.
• The Reserve Bank of Australia has reduced its population growth forecasts, reflecting stricter foreign student entry requirements.
• The Reserve Bank of Australia's forecasts for China have been upgraded due to stimulus plans in Beijing.