Reserve Bank of Australia Assistant Governor (Economic) Marion Kohler spoke at a conference on the outlook for the Australian economy, approaches the Bank uses to assess where the economy is relative to full employment, and a review of economic forecasts for the past year.
- Decline in inflation to be more gradual than previously thought
- Bringing inflation
back to target is likely to be more drawn out - Domestically sourced
inflation has been widespread and slow to decline - Still-strong levels
of demand have allowed businesses to pass on cost increases - Wages growth has
picked up, but now appears to have broadly stabilised - Key risks is
possibility that high inflation today feeds into inflation
expectations - Encouragingly,
measures of medium-term inflation expectations consistent with target - Labour market
conditions are easing, but are still tight
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The Reserve Bank of Australia raised its cash interest rate last week in the face of persistently above target inflation:
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