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RBA: No Rate Change Discussed, Inflation "Risks Haven't Gone Away"

RBA
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Governor Bullock has held the post-meeting press conference and stated that a shift in rates was not discussed but if the policy stance was “appropriate” and also scenarios that would require a response. She noted that the economy is developing broadly in line with the RBA’s forecasts, which has given them confidence, but inflation “risks haven’t gone away”. 

  • The statement language was changed to show that the Board has “noticed” that the real economy is slower, but it is not an indication that it is about to cut rates. Bullock made it very clear that she doesn’t know when the easing discussion will begin and when it will cut. It will be in a position to consider easing if the economy continues to develop as expected but don’t know when that will be.
  • It gained “some confidence that inflation is moving sustainably towards target” because the error band around forecasts narrows the closer we get to that forecast and underlying inflation is in line with the Q4 projection.
  • Bullock clarified that the Board is not explicitly waiting for more than one quarterly CPI print but that it will need more information. With the Board remaining data driven, monthly jobs, inflation and consumption data plus the liaison programme will all be important before February.
  • The RBA has begun to look at the impact of the Trump administration’s proposed tariffs. There is significant uncertainty given what is said may not be what is eventually done and the response of other countries is also unknown. The direct effect on Australia though is likely to be limited. It is the impact on China that will be important.
  • The new two board structure will begin on March 1 2025 but Bullock didn’t have numbers yet on who would be shifting but reiterated the need for continuity.
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Governor Bullock has held the post-meeting press conference and stated that a shift in rates was not discussed but if the policy stance was “appropriate” and also scenarios that would require a response. She noted that the economy is developing broadly in line with the RBA’s forecasts, which has given them confidence, but inflation “risks haven’t gone away”. 

  • The statement language was changed to show that the Board has “noticed” that the real economy is slower, but it is not an indication that it is about to cut rates. Bullock made it very clear that she doesn’t know when the easing discussion will begin and when it will cut. It will be in a position to consider easing if the economy continues to develop as expected but don’t know when that will be.
  • It gained “some confidence that inflation is moving sustainably towards target” because the error band around forecasts narrows the closer we get to that forecast and underlying inflation is in line with the Q4 projection.
  • Bullock clarified that the Board is not explicitly waiting for more than one quarterly CPI print but that it will need more information. With the Board remaining data driven, monthly jobs, inflation and consumption data plus the liaison programme will all be important before February.
  • The RBA has begun to look at the impact of the Trump administration’s proposed tariffs. There is significant uncertainty given what is said may not be what is eventually done and the response of other countries is also unknown. The direct effect on Australia though is likely to be limited. It is the impact on China that will be important.
  • The new two board structure will begin on March 1 2025 but Bullock didn’t have numbers yet on who would be shifting but reiterated the need for continuity.