The Reserve Bank of Australia meets for its first cash rate decision of 2023 today.
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At its last meeting in December the RBA increased the cash rate by 25 basis points to 3.10 per cent.
The slowest increase in prices in a year has stoked hopes inflation has peaked but a rate rise to bring the cash rate to 3.35 per cent is still expected today.
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Retail prices grew 1.1 per cent in the December quarter and the volume of sales declined as rising living costs convinced households to pare back their spending, according to the Australian Bureau of Statistics.
On February 2, the International Monetary Fund called for more interest rate hikes and federal government spending restraint as the country navigates a "narrow path" to slow inflation without tipping into recession.
In a major update on the health of the economy, the IMF forecast growth to slow to 1.6 per cent in 2023, down from about 3.6 per cent in 2022, as higher interest rates and weaker global growth weigh on demand and net exports, but predicted the country would avoid a recession.
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"Australia has reached a stronger cyclical position than many other advanced economies, with limited scarring," the IMF report said. "From its strong ... position, Australia's economy is expected to come to a soft landing in 2023."
Back in December RBA Governor, Philip Lowe, said inflation in Australia was too high at 6.9 per cent over the year to October.
"Global factors explain much of this high inflation, but strong domestic demand relative to the ability of the economy to meet that demand is also playing a role. Returning inflation to target requires a more sustainable balance between demand and supply," he said.
Kim Chappell
As Senior Producer - Digital for ACM's regional titles I assist newsrooms in digital best practice. Before this role, I was the digital journalist with ACM's national team and prior to that, the digital specialist with ACM's Agricultural division. I started as a general rounds journalist with The Land in 2006, moving up to hold the title of chief of staff before switching to digital reporting in 2015.
As Senior Producer - Digital for ACM's regional titles I assist newsrooms in digital best practice. Before this role, I was the digital journalist with ACM's national team and prior to that, the digital specialist with ACM's Agricultural division. I started as a general rounds journalist with The Land in 2006, moving up to hold the title of chief of staff before switching to digital reporting in 2015.
