MNI RBA Review – February 2024: Time Needed To See Job Done

EXECUTIVE SUMMARY:

• The RBA kept rates at 4.35% at its February meeting as expected. It also maintained its tightening bias and caution regarding services inflation and the labour market. While the bias was toned down slightly, its presence signals that easing is not imminent. A prolonged hold seems the most likely scenario for now.
• Governor Bullock said in her first press conference that the Board is “not ruling in or out anything” and that the risks are “broadly balanced”. In other words, the Board is keeping its options open as there remain significant uncertainties and they want to be confident that inflation will “sustainably” return to the target band. It is too early to speak of rate cuts and the message is that currently the chance of a hike is just as likely.
• A period of unchanged rates gives them the time to assess economic developments, risks and the outlook. Thus, when they do move it is likely to coincide with new quarterly CPI data and updated forecasts. The August meeting is a possibility if Q2 inflation falls below the RBA’s 3.3% forecast, but it is more likely to be in November if a return to the top of the band is still projected for Q2 2025.

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RBA Review - February 2024.pdf