Australia’s central bank says current policy is curbing inflation but warns additional hikes may be needed if risks materialize.
Reserve Bank of Australia Assistant Governor Chris Kent stated that recent cash rate increases are achieving their intended impact on inflation. The elevated exchange rate is helping reduce domestic import prices, supporting disinflation efforts. Kent noted the cash rate is near the top of neutral rate estimates, though uncertainty remains high around these projections.
Housing market conditions have softened noticeably in recent months, partly due to tax changes in the federal budget. Despite this, significant investment in data centers and AI infrastructure continues to support aggregate demand. Governor Michele Bullock highlighted persistent inflation risks and disappointing productivity, complicating the inflation fight.
The RBA board will weigh broad financial conditions in future decisions, with further rate hikes possible if risks emerge. At press time, the AUD/USD pair traded 0.03% higher at 0.7064, reflecting modest market reaction to the comments.