MNI BRIEF: RBA Repeats 'Patient' On Inflation, Rate Hike

The Reserve Bank of Australia said on Friday it is “prepared to be patient” as it monitors domestic inflation and believes it is too early to conclude that underlying inflation – which printed recently at 2.6% - is sustainably within the bank’s 2% to 3% target range.

The RBA’s updated Statement on Monetary Policy, upgrades the bank’s forecast for underlying inflation for 2022 by 50 basis points to 2.75% and forecasts a decade-low unemployment rate of 3.75%. The forecast for wages growth, which the bank sees as key to driving inflation, is also upgraded to 2.75% by December, see: MNI STATE OF PLAY: RBA Stays Firm On Cash Rate View, Drops QE.

Despite this, the statement puts no timeline on the next rise in interest rate, emphasizing the uncertainty of the inflation outlook as inflation reaches the midpoint of the target range for the first time in over seven years.

“Progress towards the bank’s goals have been material, but significant uncertainties surround the inflation outlook,” the statement said.