• Underlying inflation remains too high.

  • Headline inflation has fallen sharply in recent months, as expected, due to declines in fuel and electricity prices.

  • The RBA assessment shows that demand in the economy still exceeds supply and that the labour market remains tight.

• The cash rate remains unchanged to support inflation returning to target.

  • Output growth is expected to recover, and easing in the labour market will be gradual.

  • Inflation is expected to return sustainably to the target's midpoint in late 2026.

  • At its November 2024 meeting, the Reserve Bank Board left the cash rate target unchanged.

• In most advanced economies, continuing disinflation and softer labour market outcomes have recently resulted in central banks cutting their policy rates.

  • Underlying inflation has eased further across advanced economies, as expected, and more so than in Australia.

  • Economic growth continues to recover in many of Australia’s major trading partners.

• Australia's Financial conditions weigh on private domestic demand but are judged to be less restrictive than in most peer economies.

  • The current cash rate setting is assessed to be restrictive but less so than the policy rate settings in most peer economies.

  • Restrictive financial conditions have weighed on private domestic demand, while public demand has contributed to economic activity growth and labour demand.

  • Productivity growth remains weak, and the economy-wide level is currently around 2016 levels.

  • Conditions in the labour market remain tight relative to the assessment of total employment. Employment growth has been strong in recent months. The unemployment rate increased in the September quarter to 4.1 per cent, as labour force participation outpaced employment growth.

• The global outlook is for moderate economic growth and further easing of inflation.

  • Overall GDP growth for Australia’s major trading partners is expected to be moderate.

• Growth in Australia is expected to return slowly to around its potential growth rate.

  • The outlook for growth in 2025 and 2026 has been revised down slightly.

  • The labour market is expected to ease to around full employment by late 2025 gradually.

• Inflation is expected to return sustainably to the midpoint of the target range by the end of 2026.

  • The outlook for underlying inflation has changed little since the August Statement.

  • Due to temporary cost-of-living support to households, headline inflation will remain below underlying inflation for a while. Following the end of these support measures (as legislated), headline inflation is expected to increase in the second half of 2025 to be outside the target range before declining again to converge with measures of underlying inflation. Headline and underlying inflation are projected to reach 2.5 percent by 2026.

• At its November 2024 meeting, the Reserve Bank Board left the cash rate target unchanged at 4.35%

To read the full RBA Statement on monetary policy click on the link below.

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