RBA Assistant Governor Sarah Hunter said in a speech on Tuesday that recent data suggest the Australian economy has been performing slightly stronger than expected, reinforcing the Bank’s decision to keep the cash rate unchanged at 3.60% at its September meeting. She noted that the RBA continues to see signs that “private demand is recovering,” “inflation may be persistent in some areas,” and that labor market conditions remain “stable.”
Hunter highlighted that GDP grew 1.8% over the year to the June quarter. “If anything, outcomes have been a little stronger than those expected in the August SMP,” she said, citing resilient private spending and steady employment as evidence that the economy remains on firmer footing than previously anticipated.
She also pointed to high-frequency indicators showing that underlying inflation in the September quarter is likely to be stronger than anticipated, suggesting that economic and labor market conditions remain “a bit tighter than we had assessed.” However, she acknowledged that employment growth has slowed “slightly” more than expected, while “elevated” global uncertainty continues to cloud the outlook.
Hunter concluded that the RBA will “continually reassess” its view on the economy and adjust policy as appropriate.
