Statement by the Reserve Bank Board: Monetary Policy Decision - February 2024 | Media Releases | RBA
Central bank: rba | Type: statement | Date: 2024-02-06

Media Release
Statement by the Reserve Bank Board: Monetary Policy Decision
6 February 2024
At its meeting today, the Board decided to leave the cash rate target unchanged at 4.35 per cent
and the interest rate paid on Exchange Settlement balances unchanged at 4.25 per cent.
Inflation continues to moderate but remains high.
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. It has
continued to ease, reflecting the resolution of earlier global supply chain disruptions and a moderation
in domestic demand for goods. Services price inflation, however, declined at a more gradual pace in line
with the RBA’s earlier forecasts and remains high. This is consistent with continuing excess demand
in the economy and strong domestic cost pressures, both for labour and non-labour inputs.
Higher interest rates are working to establish a more sustainable balance between aggregate demand and
supply in the economy. Accordingly, conditions in the labour market continue to ease gradually, although
they remain tighter than is consistent with sustained full employment and inflation at target. Wages
growth has picked up but is not expected to increase much further and remains consistent with the
inflation target, on the assumption that productivity growth increases to around its long-run average.
Inflation is still weighing on people’s real incomes and household consumption growth is weak, as is
dwelling investment.
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. The central forecasts are for inflation to return to the target range of
per cent in 2025, and to the midpoint in 2026. Services
price inflation is expected to decline gradually as demand moderates and growth in labour and non-labour
costs eases. Employment is expected to continue to grow moderately and the unemployment rate and the
broader underutilisation rate are expected to increase a bit further.
While there have been favourable signs on goods price inflation abroad, services price inflation has
remained persistent and the same could occur in Australia. There also remains a high level of uncertainty
around the outlook for the Chinese economy and the implications of the conflicts in Ukraine and the
Middle East. Domestically, there are uncertainties regarding the lags in the effect of monetary policy
and how firms’ pricing decisions and wages will respond to the slower growth in the economy at a
time of excess demand, and while the labour market remains tight. The outlook for household consumption
also remains uncertain.
Returning inflation to target is the priority.
Returning inflation to target within a reasonable timeframe remains the Board’s highest priority.
This is consistent with the RBA’s mandate for price stability and full employment. 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.
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. The path of interest rates that will
best ensure that inflation returns to target in a reasonable timeframe will depend upon the data and the
evolving assessment of risks, and a further increase in interest rates cannot be ruled out. The Board
will continue to pay close attention to developments in the global economy, trends in domestic demand,
and the outlook for inflation and the labour market. The Board remains resolute in its determination to
return inflation to target and will do what is necessary to achieve that outcome.
More on the February 2024 monetary policy decision...
Media Conference
Governor Michele Bullock addresses the media after the monetary policy decision.
Media Conference
Monetary Policy Minutes
Minutes of the Reserve Bank Board meeting, published two weeks after the decision.
Monetary Policy Minutes
Statement on Monetary Policy
The RBA's assessment of the economy that the Board considered in making its decision.
Statement on Monetary Policy