Statement by the Reserve Bank Board: Monetary Policy Decision - August 2024 | Media Releases | RBA
Central bank: rba | Type: statement | Date: 2024-08-06

Media Release
Statement by the Reserve Bank Board: Monetary Policy Decision
6 August 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 remains above target and is proving persistent.
Inflation has fallen substantially since its peak in 2022, as higher interest rates have been working to
bring aggregate demand and supply closer towards balance. But inflation is still some way above the
midpoint of the
per cent target range. In underlying
terms, as represented by the trimmed mean, the CPI rose by 3.9 per cent over the year to the
June quarter, broadly as forecast in the May
Statement on Monetary Policy
(SMP). But the
latest numbers also demonstrate that inflation is proving persistent. In year-ended terms, underlying
inflation has now been above the midpoint of the target for 11 consecutive quarters. And quarterly
underlying CPI inflation has fallen very little over the past year.
The outlook remains highly uncertain.
The economic outlook is uncertain and recent data have demonstrated that the process of returning
inflation to target has been slow and bumpy.
The central forecasts set out in the latest SMP are for inflation to return to the target range of
per cent late in 2025 and approach the midpoint in 2026.
This represents a slightly slower return to target than forecast in May, based on estimates that the gap
between aggregate demand and supply in the economy is larger than previously thought. In part, this
reflects an increase in the forecast for domestic demand. But it also reflects a judgement that the
economy’s capacity to meet that demand is somewhat weaker than previously thought, evidenced by the
persistence of inflation and ongoing strength in the labour market.
There is substantial uncertainty around these forecasts. Revisions to consumption and the saving rate in
the most recent National Accounts, high unit labour costs and the persistence of inflation –
particularly in the services sector – suggest there are upside risks to inflation. Wages growth
appears to have peaked but is still above the level that can be sustained given trend productivity
On the other hand, momentum in economic activity has been weak, as evidenced by slow growth in GDP, a rise
in the unemployment rate and reports that many businesses are under pressure. And there is a risk that
household consumption picks up more slowly than expected, resulting in continued subdued output growth
and a noticeable deterioration in the labour market.
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 slower growth in the economy at a time of
excess demand, and while conditions in the labour market remain tight.
There also remains a high level of uncertainty about the overseas outlook. The outlook for the Chinese
economy has softened and this has been reflected in commodity prices. Some central banks have eased
policy, although they remain alert to the risk of persistent inflation. Globally, financial markets have
been volatile of late and the Australian dollar has depreciated. Geopolitical uncertainties remain
elevated, which may have implications for supply chains.
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. To date,
longer-term inflation expectations have been consistent with the inflation target and it is important
that this remain the case.
Inflation in underlying terms remains too high, and the latest projections show that it will be some time
yet before inflation is sustainably in the target range. Data have reinforced the need to remain vigilant
to upside risks to inflation and the Board is not ruling anything in or out. Policy will need to be
sufficiently restrictive until the Board is confident that inflation is moving sustainably towards the
target range.
The Board will rely upon the data and the evolving assessment of risks to guide its decisions. In doing
so, it will continue to 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 remains
resolute in its determination to return inflation to target and will do what is necessary to achieve that
More on the August 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