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Australia Monetary Policy February 2024

Australia: RBA stands pat in February

At its monetary policy meeting on 6 February, the Reserve Bank of Australia (RBA) left the official cash rate (OCR) unchanged at 4.35%. The decision marked the second consecutive hold.

The Bank decided to leave the monetary policy stance unchanged as it assessed that, even if inflation is moderating, it remains elevated. In its updated forecasts, the Bank now expects inflation to hit the midpoint of its 2.0–3.0% inflation target range only in 2026.

The Bank reiterated that it “remains resolute in its determination to return inflation to target and will do what is necessary”. The path of future monetary policy will depend on data and the evolving outlooks for inflation, domestic demand, the labor market and the global economy. Our panelists expect the RBA to start easing its policy stance this year as inflation moderates.

The next monetary policy meeting is scheduled for 18–19 March.

Commenting on the outlook, UOB’s Lee Sue Ann stated:

“We think that the Q4 2023 CPI data overall provides some breathing room and thus will not push the RBA in the same manner as in November 2023. For now, we see the current cash rate of 4.35% to be the peak. We also see the data-dependent RBA holding off policy easing until later in the year.”

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