Inflation risks remain uncomfortably high and monetary policy is likely to need further tightening, the RBA warned today.
In its quarterly statement on monetary policy the bank adjusted its forecast for underlying inflation to rise to around 3.5 per cent by the end of the year – due to pressures on capacity that are expected to remain for some time.
“On the current outlook, then, and allowing for the inevitable uncertainties in forecasting, the risk of inflation remaining uncomfortably high for some time is considerable,” the RBA said.
“Absent a further shift in economic risks to the downside, therefore, monetary policy is likely to need to be tighter in the period ahead.”
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