The central bank has left the official cash rate at 4.35 per cent while predicting inflation will remain in its 2-3 per cent inflation target until the middle of next year.
The Reserve Bank has held interest rates steady while predicting inflation will remain in its 2-3 per cent inflation target until the middle of next year before climbing due to the end of federal energy rebates.
In its quarterly monetary policy statement, the bank said the economy was still operating above its capacity to produce goods and services without adding to inflation, but conditions were continuing to ease.“Underlying inflation is expected to return to the target range of 2-3 per cent in mid to late 2025 and to the midpoint of the target in late 2026,” it said.
While there is tipped to be a drop-off in public spending in the near term, the bank said this was likely to be temporary “given investment spending announced in government budgets and the large pipeline of engineering work yet to be done”. “Households remain budget conscious, reducing non-essential spending, trading down to cheaper items, shopping around more to compare prices and waiting for items to go on sale,” the bank said.“Households are spending less on experiences and eating out and choosing more affordable options for their holidays.”
But the bank noted that in its talks with businesses, employment intentions were edging lower and were now below their long-term averages. Businesses have told the bank they are winding back new jobs as they try to control costs, lift productivity or face weaker demand.
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