Australia Interest Rate

Inflation risks in Australia have eased, but headwinds persist, particularly regarding global economic conditions and elevated services inflation, minutes from the Reserve Bank's December policy meeting showed. It added that monetary policy would need to remain sufficiently restrictive until members are confident that inflation is sustainably returning to the 2–3% target. Underlying inflation remains high at around 3-1/2%, well above the 2-1/2% midpoint of the goal. The board stressed a data-driven approach to future rate decisions, reaffirming that returning inflation to target is the top priority. On the domestic front, economic output growth was weak in Q3 2024. While recent data indicated a pick-up in consumption in October and November, it is too early to determine whether this reflects a sustained recovery or temporary pre-holiday spending. Members emphasized that trends in consumer spending will be pivotal for GDP growth and labor market developments moving forward.