The Reserve Bank of Australia cut the cash rate by 25 basis points to 4.10% on Tuesday in its first easing since the 2020 pandemic, but was cautious about the prospects for further policy easing.
The most important statements in the monetary policy statement issued by the Reserve Bank of Australia are as follows:
- The Australian Reserve believes that domestic financial conditions are restrained, and interest rates are above the neutral level.
- Inflation and GDP are weaker than expected, the labor market is strong.
- Core inflation is slowing down.
- The economic outlook remains uncertain.
- The Australian Reserve will continue to rely on data and sophisticated risk assessment to guide monetary policy decisions.
- The Australian Reserve has become more confident that inflation is moving sustainably towards the midpoint of the target range 2%-3%
- Bullish risks to inflation remain.
- Sustainable return of inflation to the target level is a priority
- Weak growth in private demand continued, wage pressures subsided.
- The Australian Reserve remains cautious about the prospects for further easing in monetary policy rates.
- Some upside risks to inflation seem to have eased, there are signs that a slowdown may occur a little faster than expected earlier, however, there are risks on both sides.
- Some recent labor market data have been unexpectedly strong, suggesting that the labor market may be tighter than previously thought.
- US economic policies pose material risks to the global outlook this year and next.
- There are risks that US tariffs will lead to a noticeable tightening of financial conditions.
Reserve Bank of Australia Governor Michael Pollock's press conference :
- It is clear that high interest rates have succeeded, but we cannot declare victory over inflation yet.
- The further interest rate cuts hinted at by the market are not guaranteed.
- We cannot get ahead of ourselves on interest rates.
- It was a difficult decision, and there was an argument on both sides.
- We are still bullish, and we are waiting for more evidence of inflation progress before moving again.
- We need to continue to see the easing of wage costs, low inflation in services, falling housing prices.
- We need to see some recovery on the supply side of the economy.
- This is a small reduction in interest rates, but every small part helps.
- We felt that the best way to reduce inflation is to keep prices at their levels for a long time.
- Now is the time to unwind the price increases, but monetary policy remains restrained and this will continue to put pressure on inflation.
- The process of inflation deflation can be bumpy, and it will not be a smooth journey.
- What we just need is to seriously think about changing the policy position if inflation reverses and the relevant indicators move in the opposite direction.
- Tariffs will have an economic impact, but the impact of inflation is less certain.
- We are not trying to focus on noise and focus on what may affect us.
- We did not raise interest rates to such significant levels as other countries, so they had to lower them very quickly.
- We want to see more information about inflation and the labor market before what we do next.
- The goal is to return inflation to the middle of the target range of 2% to 3%.
