What changed in the Reserve Bank of Australia statement —
Reserve Bank of Australia held policy at 4.10%. The central bank paused after a single cut, signalling a cautious approach amid still-elevated inflation uncertainty and a tight labour market. The next move depends on data confirming sustained disinflation, with a cut possible if growth risks materialise or inflation continues to moderate.
Decision
- Decision: hold
- Cash rate: 4.10%
What changed
The central bank paused after a single cut, signalling a cautious approach amid still-elevated inflation uncertainty and a tight labour market. The next move depends on data confirming sustained disinflation, with a cut possible if growth risks materialise or inflation continues to moderate.
- Inflation — More dovish. Inflation assessment shifted from mixed (faster easing but higher forecast) to a uniformly dovish 'moderating' narrative.
- Labour Market — Little changed. Labour market description remains 'tight' in both documents, though the prior added 'tightened a little further' – current is slightly less emphatic but unchanged in stance.
Previous wording
At its meeting today, the Board decided to lower the cash rate target to 4.10 per cent and the interest rate paid on Exchange Settlement balances to 4 per cent.
In the December quarter underlying inflation was 3.2 per cent, which suggests inflationary pressures are easing a little more quickly than expected.
However, upside risks remain. Some recent labour market data have been unexpectedly strong, suggesting that the labour market may be somewhat tighter than previously thought.
The central forecast for underlying inflation, which is based on the cash rate path implied by financial markets, has been revised up a little over 2026.
So, while today’s policy decision recognises the welcome progress on inflation, the Board remains cautious on prospects for further policy easing.
a range of indicators suggest that labour market conditions remain tight and, in fact, tightened a little further in late 2024.
The Board’s assessment is that monetary policy has been restrictive and will remain so after this reduction in the cash rate.
In removing a little of the policy restrictiveness in its decision today, the Board acknowledges that progress has been made but is cautious about the outlook.
Current wording
At its meeting today, the Board decided to leave the cash rate target unchanged at 4.10 per cent and the interest rate paid on Exchange Settlement balances at 4 per cent.
Underlying inflation is moderating.
recent announcements from the United States on tariffs are having an impact on confidence globally and this would likely be amplified if the scope of tariffs widens, or other countries take retaliatory measures.
The Board needs to be confident that this progress will continue so that inflation returns to the midpoint of the target band on a sustainable basis. It is therefore cautious about the outlook.
a range of indicators suggest that labour market conditions remain tight.
Sustainably returning inflation to target is the Board’s highest priority.
The Board will rely upon the data and the evolving assessment of risks to guide its decisions.
Official statement
Media Release Statement by the Monetary Policy Board: Monetary Policy Decision
At its meeting today, the Board decided to leave the cash rate target unchanged at 4.10 per cent and the interest rate paid on Exchange Settlement balances at 4 per cent.
Underlying inflation is moderating.
Inflation has fallen substantially since the peak in 2022, as higher interest rates have been working to bring aggregate demand and supply closer towards balance. Recent information suggests that underlying inflation continues to ease in line with the most recent forecasts published in the February Statement on Monetary Policy . Nevertheless, the Board needs to be confident that this progress will continue so that inflation returns to the midpoint of the target band on a sustainable basis. It is therefore cautious about the outlook.
The Board noted that monetary policy is well placed to respond to international developments if they were to have material implications for Australian activity and inflation.
The outlook remains uncertain.
Private domestic demand appears to be recovering, real household incomes have picked up and there has been an easing in some measures of financial stress. However, businesses in some sectors continue to report that weakness in demand makes it difficult to pass on cost increases to final prices.
At the same time, a range of indicators suggest that labour market conditions remain tight. Despite a decline in employment in February, measures of labour underutilisation are at relatively low rates and business surveys and liaison suggest that availability of labour is still a constraint for a range of employers. Wage pressures have eased a little more than expected but productivity growth has not picked up and growth in unit labour costs remains high.
There are notable uncertainties about the outlook for domestic economic activity and inflation. The central projection is for growth in household consumption to continue to increase as income growth rises. But there is a risk that any pick-up in consumption is slower than expected, resulting in continued subdued output growth and a sharper deterioration in the labour market than currently expected. Alternatively, labour market outcomes may prove stronger than expected, given the signal from a range of leading indicators.
More broadly, there are uncertainties regarding the lags in the effect of monetary policy and how firms’ pricing decisions and wages will respond to the demand environment and weak productivity outcomes while conditions in the labour market remain tight.
Uncertainty about the outlook abroad also remains significant. On the macroeconomic policy front, recent announcements from the United States on tariffs are having an impact on confidence globally and this would likely be amplified if the scope of tariffs widens, or other countries take retaliatory measures. Geopolitical uncertainties are also pronounced. These developments are expected to have an adverse effect on global activity, particularly if households and firms delay expenditures pending greater clarity on the outlook. Inflation, however, could move in either direction. Many central banks have eased monetary policy since the start of the year, but they have become increasingly attentive to the evolving risks from recent global policy developments.
Sustainably returning inflation to target is the priority.
Sustainably returning inflation to target within a reasonable timeframe is the Board’s highest priority. This is consistent with the RBA’s mandate for price stability and full employment. To date, longer term inflation expectations have been consistent with the inflation target and it is important that this remain the case.
The Board’s assessment is that monetary policy remains restrictive. The continued decline in underlying inflation is welcome, but there are nevertheless risks on both sides and the Board is cautious about the outlook.
The Board will rely upon the data and the evolving assessment of risks to guide its decisions. In doing so, it will pay close attention to developments in the global economy and financial markets, trends in domestic demand, and the outlook for inflation and the labour market. The Board is resolute in its determination to sustainably return inflation to target and will do what is necessary to achieve that outcome.
Enquiries
Communications Department Reserve Bank of Australia SYDNEY
Phone: +61 2 9551 8111 Email: rbainfo@rba.gov.au
Related
Full meeting record · Press conference transcript · Previous statement · Next statement
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