February 18, 2025 at 04:45AM
We felt the best way to bring inflation down was to keep rates where they were for an extended period
Now is the right time to unwind the rate hikes
But policy is still restrictive and that will continue to keep pressure on inflation
Neutral rate is a very uncertain concept
The disinflation process can be bumpy, it won’t be a smooth ride
Only need to seriously consider change in policy stance if inflation reverses course and the related indicators move in opposite direction
Tariffs will have economic impact but inflation impact is less certain
We are not trying to focus on the noise and focus on what might impact us
She is firmly reiterating that monetary policy remains in restrictive territory, reaffirming that their priority is to pin down inflation pressures.
Her job is to sell a more hawkish rate cut and that’s precisely what she’s doing. That said, it is not to say that markets were not expecting this positioning play by the RBA.
I mean, they are the last among the major central banks to be easing policy after having last hiked rates in November 2023. So, we’ve all seen this same playbook before.
This article was written by Justin Low at www.forexlive.com.
