- Prior was 4.35%
- While recent data indicate that inflation is easing, it remains high. The Board expects that it will be some time yet before inflation is sustainably in the target range
- Inflation continued to ease in the December quarter. Despite this progress, inflation remains high at 4.1 per cent.
- Goods price inflation was lower than the RBA’s November forecasts.
- Services price inflation, however, declined at a more gradual pace in line with the RBA’s earlier forecasts and remains high.
- While there have been favourable signs on goods price inflation abroad, services price inflation has remained persistent and the same could occur in Australia.
- Wages growth has picked up but is not expected to increase much further and remains consistent with the inflation target
- The outlook is still highly uncertain.
- While there are encouraging signs, the economic outlook is uncertain and the Board remains highly attentive to inflation risks
- Services price inflation is expected to decline gradually as demand moderates and growth in labour and non-labour costs eases.
- The Board needs to be confident that inflation is moving sustainably towards the target range.
- To date, medium-term inflation expectations have been consistent with the inflation target and it is important that this remains the case
- The RBA will hold a press conference one hour after the decision
AUD/USD trading at 0.6493 just ahead of the release, up 11 pips on the day so far but yesterday's low of 0.6469 was the lowest since November 16.
Prior to the release, the August 6 meeting was 93% priced for the first rate cut of the cycle with 44 bps priced in by year end.
I cringed at the line: "The Board needs to be confident that inflation is moving sustainably towards the target range." It's a plain copy/paste of what the ECB, Fed and others have said. Is it too much to ask that someone drops the groupthink? Or at least pretends to?
In any case, the Australian dollar has climbed about 10 pips on the report, which held the language 'a further increase in interest rates cannot be ruled out' indicating which isn't a shift to a neutral stance.