RBA Kohler: Australian inflation is coming down but its still too high

Marion Kohler, the Reserve Bank of Australia’s Head of Economic Analysis, speaking at the Australian Business Economists Annual Forecasting Conference in Sydney.

Headlines via Reuters:

  • Inflation coming down but still too high
  • It will take some
    time for inflation to get back within the 2-3% target range
  • Expect it to return
    to target range in 2025, and to the midpoint in 2026
  • Services inflation
    high and broadly based, likely to decline only gradually
  • Expect economic
    growth to remain subdued in the near term
  • High inflation,
    higher tax payments and interest rates have significantly reduced
    household incomes
  • Most labour market
    indicators still look ‘tight’ relative to historical norms
  • Seeing signs of
    easing wage pressures in some industries, particularly in business
  • Expect much of
    adjustment in labour market to happen via drop in average hours

There is not anything surprising in these remarks. Kohler hedge a little on those ‘return to target’ inflation time projections”

  • “I’d like to stress that there is substantial uncertainty around forecasts
    that far out”

Kohler also said that the expected slowdown in inflation would require a recovery
in productivity. Australian productivity has been very subdued in the last few
years, but Kohler is optimistic it’d improve once
temporary factors
related to the COVID-19 pandemic played out.

Huh. We’ll see.

This article was written by Eamonn Sheridan at www.forexlive.com. Source