RBA Predicts Inflation Easing Back to Target by Mid-2028
The Reserve Bank of Australia (RBA) has released its quarterly Statement on Monetary Policy, predicting that inflation will ease back to the 2%-3% target band in the second half of next year. The bank expects consumer price inflation to slow from 3.9% in the second quarter to 3.6% by the end of the year and then to 2.6% by the end of 2027.
The RBA also forecasts that underlying inflation, a trimmed mean measure closely watched by the bank, will slow to 3.3% by the end of the year from a peak of 3.6% last quarter, before falling back to 2.4% by mid-2028.
Despite this, the RBA warns that inflation risks are still tilted to the upside due to tensions in the Middle East and expects cost pressures to cool little quicker than previously thought as financial conditions remain tight.