The Reserve Bank of Australia (RBA) is in a challenging position, contending with accelerating inflation and moderating economic growth, according to Deloitte Access Economics partner Stephen Smith. This assessment follows the latest inflation figures from the Australian Bureau of Statistics, which revealed a higher-than-expected 3.8 per cent increase in October. Deloitte Access Economics provides trusted, objective advice, working with organisations to help them make better decisions, navigate change, and achieve sustainable outcomes. They offer services including economic forecasting and modelling, policy analysis, and industry analysis.
Smith noted the recent acceleration of inflation pressures within the Australian economy. “Inflation pressures in the economy have accelerated in the recent past. The data released shows that on an annualised basis, trimmed mean inflation was running at more than 4 per cent in October and at more than 3.5 per cent annualised over the past three months,” Smith said.
The RBA faces the difficult task of supporting economic growth while simultaneously managing inflation to bring it back within the target range of 2 to 3 per cent. Smith described this situation as a “central banker’s nightmare,” highlighting the inherent conflict between these two objectives.
Despite these challenges, Deloitte Access Economics maintains its expectation that the next movement in interest rates will be downward. However, Smith cautioned that the exact timing of this adjustment remains uncertain, contingent on the economy’s performance relative to the RBA’s revised forecasts in the months ahead.
