Interest rate relief edges closer as RBA changes tune

The RBA has "some confidence inflationary pressures are declining", governor Michele Bullock says. Video by AAP

Transcript

00:00cash rate unchanged at 4.35 per cent. It's been at that level since November last year but because

00:07monetary policy operates with a lag we think we need to be careful, think carefully about where

00:12we're going. With inflation coming down and employment growing we think we remain on the

00:18narrow path. The board's been trying to bring inflation back to target in a reasonable time

00:24frame while preserving the gains in the labour market but underlying inflation currently remains

00:29too high and for some time now we've pointed out there are risks on both sides. Because persistent

00:36inflation is so bad for the economy we've been alert to the upside risks on inflation but we've

00:42also been conscious of the downside risks. Risks economic data have been mixed and some indicate

00:49a softening in line with our forecasts. That said on balance some data are a little softer than

00:55expected. This has given the board some confidence that inflationary pressures are declining

01:01but risks remain. The board needs to be confident that inflation is moving sustainably towards the

01:07target and for this to occur we need to see more progress on underlying inflation coming down.