In the statement of monetary policy, “the Board will not increase the cash rate target until progress is being made towards full employment and it is confident that inflation will be sustainably within the 2–3 per cent target band”. Additionally, “the Board is committed to do what it can to support jobs, incomes and businesses during this difficult period and to make sure that Australia is well placed for the expected recovery.”
In the latest projections, GDP could contract by as much as -6.00% in the year ended December 2020, then recovered by 6.00% in the year-ended December 2021. Unemployment rate would surge to 10% in June 2020, then gradually drop back to 6.50% in two year’s time, without reaching the pre-crisis level of 5.20%.
Path of headline inflation projected is rather rocky. CPI would tumble to -1.00% in June 2020, then surge to 2.75% by June 2021, then drop back to 1.25-1.50% before June 2022. Trimmed mean inflation would remain steady, though, at between 1.25-1.50% throughout projection horizon, without hitting the 2% target.
