In a Bloomberg Australia interview, Reserve Bank of Australia Deputy Governor Andrew Hauser discussed the Board’s first rate cut in four years, emphasising that the decision was reached by consensus after a balanced debate and that the path of any easing cycle is not set in advance. He said policy remains restrictive and the Bank still needs further evidence that inflation will return sustainably to the midpoint of the 2–3 per cent target band. Hauser pointed to “a great deal of positive news” on inflation but noted underlying inflation remains at 3.2 per cent, slightly above the band, while headline inflation is within it. He stressed that no single data point, including monthly CPI indicators, will trigger a move, given the monthly series provides only partial reads and a full inflation result is available quarterly; decisions instead draw on a broad set of data, surveys and liaison. He also disclosed that an alternative forecast considered by the Board suggested holding rates constant would have led inflation to undershoot the midpoint “by a little”, which was an important input into the cut. While markets are still pricing several further cuts, he said the Bank’s central view is that, conditioned on the market curve, inflation would be a little above target, though policy would respond if inflation or labour-market capacity turned out weaker than expected; estimates of the neutral rate were described as highly uncertain, but policy was “clearly restrictive” both before and after the cut. On broader risks, Hauser characterised immigration’s net effect on inflation as broadly offsetting via higher labour supply and higher demand, and noted some cooling in inflation measures tied to dwelling costs and rents. He highlighted global trade-policy uncertainty, including tariff scenarios, as a potential drag on activity through delayed household and business spending, with ambiguous implications for inflation, and said Chinese activity remains under close watch even as steel production and Australia’s iron ore exports have held up better than some earlier concerns suggested.
Reserve Bank of Australia 2025-02-20
Reserve Bank of Australia Deputy Governor Hauser says further rate cuts are not pre-determined after first easing in four years
Reserve Bank of Australia Deputy Governor Andrew Hauser, in a Bloomberg Australia interview, discussed the Board's first rate cut in four years, emphasizing that policy remains restrictive and further evidence is needed for inflation to sustainably return to the 2–3% target band. Hauser noted that while markets anticipate more cuts, the Bank's central view is inflation will be slightly above target, with policy adjustments contingent on inflation and labour-market conditions.