MNI RBA Review – March 2024: Uncertainties Require Options

EXECUTIVE SUMMARY:

• The RBA left rates at 4.35% as was unanimously expected. The reference to the possibility of increasing rates further was removed but given the highly uncertain outlook, the Board is “not ruling anything in or out”. The statement and press conference taken together imply that the shift was made not because the next move in rates is down, but because there are significant uncertainties and the Board wants the flexibility to act as it needs to.
• Governor Bullock said that the economy remains on the expected and “narrow path”, suggesting a high probability of a prolonged hold. Bullock strongly conveyed that rates could still move either way depending on inflation outcomes and currently there are risks in both directions.
• Inflation worries persist, with services continuing to be front and centre but also elevated unit labour costs were mentioned. Bullock said that inflation continues to be her main concern.
• The next meeting is not until May 7 which will include updated staff forecasts and Q1 CPI data due on April 24. While currently neither are likely to alter the rule “anything in or out” position, given elevated uncertainties, that could change.

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RBA Review - March 2024.pdf