Inflation risks in Australia have eased, but uncertainties remain, particularly concerning global economic conditions and high services inflation, according to minutes from the Reserve Bank's December policy meeting.
The minutes noted that monetary policy must stay sufficiently restrictive until members are confident inflation is consistently returning to the 2–3% target. Underlying inflation remains elevated at around 3.5%, well above the 2.5% midpoint of the target range. The board emphasized a data-driven approach to future rate decisions, reaffirming that bringing inflation back to target remains the primary focus. On the domestic front, economic output growth was weak in Q3 2024.
Macro are still mixed
While recent data showed a rise in consumption in October and November, it is too early to determine whether this indicates a sustained recovery or just a temporary boost from pre-holiday spending. The board highlighted that trends in consumer spending will be crucial for GDP growth and labor market developments going forward.
