AU RBA Monetary Policy Statement

Prior to the conflict in the Middle East, inflation in Australia was materially above target, and the economy and labour market were operating with ongoing capacity pressures. GDP growth picked up strongly in the December quarter 2025, as expected, to be above estimates of the potential rate of growth. Labour market outcomes have been broadly as expected recently and conditions remain somewhat tight. The conflict has led to sharp increases in commodity prices, particularly energy, which has pushed inflation higher. This has ...

Australian economic growth and inflation have both been stronger than expected compared with six months ago. The recent pick-up in inflation has been broadly based and our assessment is that some of the increase in inflation has been driven by capacity constraints that are proving greater than previously anticipated. Overall, the economy seems to be further from balance than had been assessed last year. Labour market conditions have been broadly steady in recent months and remain a little tight. The inflation outlook has been revised ...

Australian financial conditions have eased further following the Board’s decision to lower the cash rate in August. Reductions in the cash rate over recent months have passed through to bank funding costs and lending rates, though scheduled mortgage payments remain elevated relative to historical averages. Growth in housing prices and housing credit has picked up further, consistent with the easing in policy this year, and the ratio of household credit to household disposable incomes has stabilised (though is still around 5 ...

Inflation has continued to come down and is within our target range of 2–3 per cent. The unemployment rate has increased a little but remains low. We expect the Australian economy to grow over the next year, but uncertainty in the global economy remains high. Over the past few years higher interest rates have slowed demand in the economy, which has helped bring inflation down. Although growth in the economy has slowed, spending by households and businesses has increased by more than expected over recent months. We expect it to ...

In Australia, inflationary pressures have continued to ease, and both headline and underlying inflation are within the 2–3 per cent range. The unemployment rate has remained steady and employment growth has remained firm, but the pick-up in household consumption seems to be a bit softer than previously expected. The global economic outlook has worsened following the introduction of higher tariffs by the United States and a significant increase in uncertainty related to trade policies. This is expected to weigh on Australia’s domestic ...