RBA Deputy Governor Andrew Hauser explained the 25bps rate cut to 4.10% earlier this week, highlighting that the decision was influenced by an “alternative version” of the inflation forecast. Under a scenario where rates remained unchanged, inflation would have undershot inflation target midpoint, albeit slightly. This factor played a key role in the board’s decision to ease policy.
However, Hauser struck a cautious tone on further cuts, emphasizing that core inflation at 3.2% remains above target. He reinforced that RBA’s remains “rigorously” focused on controlling price pressures, stating that the battle against inflation is “not a done deal” . He explained that RBA is not “whamming down on the accelerator”, but has simply “eased back on the brake a little bit”.
Regarding the strong January employment report release today, Hauser welcomed the figures, calling them part of a “striking employment growth” trend in Australia. He noted that Australia’s labor market performance stands out internationally, with strong participation rates and employment growth exceeding many other developed economies.
