The RBA appears to have learnt from past mistakes by opening up its interest rate options while it waits to see if its November rate rise tipped Australia's economy into a worrying downward spiral.
At the start of February, the Reserve Bank was talking tough, telling us "a further increase in interest rates cannot be ruled out".
"There is a risk that the RBA has to wait until 2025 before they start cutting rates, but our central scenario is November this year," ANZ senior economist Catherine Birch opines.There is another reason the Reserve Bank made its subtle but significant shift in language. The per capita recession continued, and even record population growth could only drive total economic output a measly 0.2 per cent higher overall, which anticipated the 1.5 per cent annual growth rate to December, and expect that to slow further to 1.3 per cent over the year to June.that annual GDP growth would pick up from 1.6 per cent in the year to December 2023 to 1.8 per cent in the year to June 2024.But it's the unemployment rate that could prove more concerning.
"If we do see a real bounce back in employment, that suggests that actually the labour market is only easing gradually and they'll need to keep rates where they are for some time. "Then we can slow the economy enough that it preserves a lot of the gains in employment and brings inflation down." It's also why federal Treasurer Jim Chalmers is already shifting his thinking and rhetoric ahead of his next budget in May.
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