Statement by the Reserve Bank Board: Monetary Policy Decision - March 2024 | Media Releases | RBA
Central bank: rba | Type: statement | Date: 2024-03-19

Media Release
Statement by the Reserve Bank Board: Monetary Policy Decision
19 March 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.
Recent information suggests that inflation continues to moderate, in line with the RBA’s latest
forecasts. The headline monthly CPI indicator was steady at 3.4 per cent over the year to
January, with momentum easing over recent months, driven by moderating goods inflation. Services
inflation remains elevated, and is moderating at a more gradual pace. The data are 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 picked up a little further in the December quarter, but appears to have peaked with indications it
will moderate over the year ahead. Nevertheless, this level of wages growth remains consistent with the
inflation target only 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 remains highly uncertain.
While there are encouraging signs that inflation is moderating, the economic outlook remains uncertain.
The December quarter national accounts data confirmed growth has slowed. Household consumption growth
remains particularly weak amid high inflation and the rise in interest rates. After recent declines, real
incomes have stabilised and are expected to grow from here, which is expected to support growth in
consumption later in the year.
Meanwhile, growth in unit labour costs remains very high. It has begun to moderate slightly as measured
productivity growth has picked up in the past two quarters but whether this trend will be sustained is
uncertain.
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 remains uncertain and the Board is
not ruling anything in or out. The Board will rely upon the data and the evolving assessment of risks.
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.
More on the March 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