iscover
iscover 
Speaking at the post-monetary policy meeting press conference yesterday (10 December) afternoon, Reserve Bank of Australia (RBA) governor Michele Bullock quelled the notion that the RBA may have waited too long to move interest rates as it held the cash rate again at 4.35 per cent.
Bullock, when asked if the RBA is at risk of repeating mistakes of the past by moving too slowly based on economist commentary, stated: “If we really thought we had things wrong, we would have moved, I think is the answer to that.”
“There’s [a] difference of opinions on how to weight various signals that are coming from the economy. It’s true that some of the economic data has been a bit softer, and it’s also true that some of the nominal side, in particular, inflation, is remaining quite elevated, so you’ve got two sets of data which are telling you possibly different things.
“What I would suggest is that … there is a difference between the rate of growth in the economy, and we all know it’s slowing, the private sector in particular is slowing, and the level of demand.
“We’ve been making this point for some time that growth exploded so strongly coming out of the pandemic that it got very strong at a very high level, and the economy couldn’t supply the goods and services that people were demanding coming out of the pandemic.
“We’re still experiencing that, so we have to have a period of slower growth,” Bullock said.
She further added that the RBA’s forecasts suggest that GDP growth will start to pick up as real disposable incomes begin to accelerate over the course of 2025 and inflation will continue to reduce.
“We still think we’re on that path,” Bullock said.
Based on the weakness in the economy, Bullock was asked that the RBA’s modelling and business liaison had let them down.
She responded: “I’d say that broadly, our forecasts for inflation and inflation have come in as we expected.
“I don’t think we’ve missed that dramatically. There has been a sense in which consumption has recovered a little bit [slower] than we might have expected, but the numbers we’re talking about a relatively small.
“We basically feel that at the moment, we’re pretty much in line with our forecasts … things can move in either direction, but at the moment, we look pretty much in line.”
Additionally, Bullock confirmed that the RBA did not “explicitly consider” an interest rate cut “or the reverse” during the December meeting.
“What we looked at, similar to [the] last meeting … we have found out that since the previous meeting and asked the question whether or not we felt that the current stance of policy was appropriate.
“Like the previous meeting, the board spent time talking about ‘what are the sorts of things that would make them move in one direction or the other?’”
The December monetary policy meeting was the final board meeting for 2024 and is not set to meet again until 17–18 February 2025.
[RELATED: No Christmas miracle for borrowers as RBA holds]
ISCOVER 
