The Reserve Bank of Australia’s (RBA) recent meeting minutes indicate that the Australian economy is projected to stabilise around its potential growth rate from late 2025. This outlook follows three interest rate cuts implemented by the central bank earlier in the year to stimulate economic activity. The RBA’s GDP forecasts remain largely consistent with those from August, reflecting an upward revision in private demand offset by a downward adjustment in public demand. The bank anticipates the unemployment rate will remain near 4.5 per cent.
Despite the rate cuts, underlying inflation has been revised upwards following robust figures from the September quarter. The RBA now expects underlying inflation to remain above 3 per cent until the latter half of 2026. Headline inflation is projected to track even higher over the same period. This is largely attributed to the cessation of electricity rebates, which had previously helped to moderate price increases for households.
The minutes highlighted that these forecasts are predicated on approximately 0.3 percentage points of additional monetary easing. The RBA views the risks to both growth and inflation as balanced, suggesting that the economic outlook is subject to uncertainties that could either boost or dampen economic activity and price pressures. The central bank will continue to monitor economic conditions and adjust monetary policy as needed to achieve its objectives of price stability and full employment.
Overall, the minutes paint a picture of a steady, if unspectacular, economic outlook. Inflation remains a key concern for policymakers, with the potential for further interest rate adjustments to manage inflationary pressures and sustain economic growth in the medium term. The RBA will closely monitor incoming data and global economic developments to inform its future policy decisions.
