The RBA Monetary Policy Board held the cash rate at 3.60% today as widely anticipated.
The Board “remains cautious about the outlook given recent evidence of more persistent inflation in the economy”. This assessment is based on:
stronger-than-expected Q3 inflation;
an increase in some measures of capacity utilisation (including the NAB business survey measure); and
continued elevated labour and non-labour cost growth in parts of the economy.
The SMP noted that “[w]hile part of the increase in underlying inflation is expected to be temporary, taken together with broader indicators of capacity utilisation in the economy, the data suggest there is a little more inflationary pressure in the economy than previously thought”. This point was re-iterated by the Governor at her press conference.
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