RBA Governor Michele Bullock told a parliamentary committee today that the central bank expects underlying inflation to moderate toward the midpoint of its 2–3% target range, with forecasts conditioned on the market’s assumption of modest further easing. Recent rate cuts are seen supporting household and business spending, while real income growth should help sustain consumption in the year ahead.
She noted that domestic data since the August meeting have been “broadly in line with expectations, or slightly stronger,” giving the Board some confidence heading into next week’s policy meeting. But Bullock stressed that forecasts remain only estimates, and the outlook is highly uncertain, particularly given the unpredictable global environment.
She highlighted risks on both sides: growth momentum may fade, or it could prove “materially stronger” than anticipated. Bullock warned that “excess demand” in the economy and labour market could persist, particularly that “productivity growth has not picked up and growth in unit labour costs remains high”.
