Reserve Bank of Australia (RBA) Governor Michele Bullock reiterated that while progress has been made on inflation, the central bank remains cautious about easing monetary policy too quickly or by too much. She highlighted the risk that such a move could stall disinflation and result in inflation settling above the midpoint of the target range.
Key Quotes:
“If monetary policy is eased too quickly or by too much, disinflation could stall and inflation would settle above the midpoint of the target range.”
“We have not pre-committed to any particular course of action on interest rates.”
“While the strong employment growth is good news for jobseekers, we are alert to the possibility that it is signaling a bit more strength in the economy.”
“We are satisfied with the progress on inflation so far, though our job is definitely not done.”
“The board remains cautious about prospects for further policy easing.”
“We might have some more cuts in rates but we have to be cautious. We’re going to be data driven, and people have to be patient.”
Bullock emphasized that the economic outlook remains uncertain, with a strong labor market continuing to signal strength in the economy. However, she cautioned that while further rate cuts are possible, the RBA will remain data-driven and patient in assessing the right course of action.
Market Reaction: At the time of writing, the AUD/USD pair was down 0.08% on the day, trading at 0.6398.
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