Statement on Monetary Policy – November 20253. Outlook
Summary
- GDP growth in Australia has recovered over the past year and is forecast to stabilise around its potential growth rate from late 2025. The boost to growth from the easing in monetary policy is expected to offset the diminishing boost from the earlier decline in inflation, the Stage 3 tax cuts and the expected moderation in public demand growth.
- The level of GDP at the end of the forecast period is little changed from the August Statement, with an upgrade to private demand offset by a downward revision to public demand. The forecasts are conditioned on market expectations for around 30 basis points of easing in the cash rate over the next year, which is around 30 basis points less than what was assumed at the August Statement. Despite a slightly higher cash rate path than previously assumed, the strong recent momentum in housing prices has led to an upward revision to the outlook for housing prices, and this is expected to provide further support to household consumption and dwelling investment over the forecast period. Public investment has unexpectedly declined in recent quarters and information from liaison suggests that the pipeline of infrastructure work is lower than previously thought.
- The unemployment rate is forecast to increase slightly (in quarterly terms) and stabilise at close to 4½ per cent as GDP growth settles around potential growth. Leading indicators of labour demand point to a broadly stable near-term outlook for labour market conditions; however, the unemployment rate has increased by more than expected recently and there is a risk that the labour market eases in the near term by more than we anticipate.
- We assess that there will still be some capacity pressures in the labour market and the economy over the forecast period, assuming the cash rate follows the market path. The below-trend growth and gradual easing in the labour market over the past year or so has brought demand and supply closer to balance in the economy, but we do not expect conditions to ease much further from here. Stronger-than-expected inflation in the September quarter, an increase in some measures of capacity utilisation, and continued elevated labour and non-labour cost growth in parts of the economy all point to a little more capacity pressures than we had previously judged. However, this assessment is very uncertain and there are risks we have misjudged the extent of excess demand there is in the economy.
- The outlook for underlying inflation has been revised slightly higher. This follows the strong September quarter outcome and our assessment that there is slightly more capacity pressure than previously thought. We expect quarterly inflation to decline in the December quarter – as some of the increase in the September quarter is assessed to be transitory – and then moderate only a little further thereafter. In year-ended terms, underlying inflation is now expected to be above the 2–3 per cent range until the second half of 2026, largely reflecting the strong September quarter outcome. Assuming the cash rate follows the market path, inflation is expected to settle at a little above the midpoint of the range in the latter part of the forecast period. The underlying inflation forecast is a little higher than at the August Statement and largely reflects our view that there is likely to be slightly more capacity pressure in the economy than previously assessed. We view the risks around the inflation outlook as balanced, and we will continue to monitor these risks closely.
- Year-ended headline inflation is expected to remain above 3 per cent for much of 2026, before returning to be a little above the midpoint of the target range by late 2027. Relative to the August Statement, the outlook for headline inflation has been revised higher alongside the upward revision to underlying inflation. Changes in the timing of electricity rebates will cause additional volatility in headline inflation over the next couple of years.
- Some downside risks to global growth remain, reflecting persistent uncertainty around the configuration and impact of trade and other economic policies. However, compared with earlier in the year, the likelihood of a severe downside scenario has diminished. GDP growth in Australia’s major trading partners is expected to slow over the second half of 2025 and into 2026 as higher tariffs weigh on global activity. Growth is expected to pick up very modestly thereafter and remain broadly stable over the remainder of the forecast period. In China, we expect that policy support will largely offset the recent slowing in domestic demand, although there are risks in both directions as authorities prepare their medium-term plans for the economy in coming months. Inflation in most advanced economies is expected to return to be around central bank targets over the next year or so.
3.1 Key judgements
Key judgement #1 – Australian GDP growth will stabilise around estimates of potential growth from late 2025, with the easing in monetary policy supporting private demand.
The recovery in GDP growth to mid-2025 reflected ongoing growth in public demand and a recovery in private demand. The pick-up in private demand has been underpinned by the recovery in real household incomes over the past couple of years as inflation eased and the Stage 3 tax cuts reduced growth in tax payable. The support to private demand from these factors is expected to moderate in the period ahead but is expected to be offset by the support to private demand from the easing in monetary policy that began in early 2025. The forecasts imply that this transition will be relatively smooth and result in year-ended growth stabilising at around 2 per cent. The possibility of a bumpier transition, in which GDP growth is above or below potential growth for a period, is explored in Key risk #1.
Key judgement #2 – Labour market conditions are not expected to ease much further.
The unemployment rate increased to an average of 4.3 per cent in the September quarter, a little higher than expected in the August Statement. Our forecast is for the quarterly average unemployment rate to increase only slightly further in the near term, stabilising at close to 4½ per cent. This is consistent with leading indicators, such as job ads and vacancies, which do not point to a marked slowing in labour demand in the near term. Our forecast takes some signal from the 0.2 percentage point increase in the unemployment rate in the month of September, but also allows for a partial retracement in the December quarter. The possibility of a more pronounced easing in the unemployment rate is explored in Key risk #2.
The forecast for a broadly stable unemployment rate also reflects our judgement that the participation rate will be little changed over the next two years. This follows an upward trend in the participation rate over recent years, driven by continued labour demand and heightened cost-of-living pressures, as well as the long-run trend of increasing female participation. Our forecasts assume that structural drivers of the longer run increase in the participation rate will be broadly offset by some unwinding of cyclical factors. In particular, we expect that there will be less incentive to enter or remain in the labour force because of the moderation in cost-of-living pressures and the greater difficulty in finding work, as evidenced by the decline in the job finding rates of the unemployed and new labour force entrants. But the outlook for labour supply is highly uncertain, and if the participation rate were to increase (e.g. if we have misjudged that cyclical factors will dampen participation), and employment growth evolves as expected, the unemployment rate would continue to trend higher.
Key judgement #3 – We assess there will be slightly more capacity pressure in the economy than previously thought, so the outlook for inflation and wages growth have been revised a little higher.
The outlook for wages growth and inflation is sensitive to our assessment of spare capacity in the economy, but there is considerable uncertainty around this assessment. In addition to what our model-driven estimates of full employment and potential output suggest, many indicators continue to point to some capacity pressures in the economy. These include elevated unit labour cost growth, high output price inflation in parts of the economy, and an above-average share of firms citing labour availability as a constraint. However, until recently other data had suggested that conditions in the economy might not be as tight. For example, there had been slightly more disinflation in the economy in late 2024 and earlier in the year than we had expected (see Box B: Annual Forecast Review), there was also some evidence of margin compression such as in the housing construction industry and the easing in the quits rate suggested less pressure on wages growth. Given the conflicting signals, the central forecasts for wages growth and inflation since the February Statement had incorporated a little downward judgement such that inflation would return to the midpoint of the target over the forecast period.
However, some of the data we had previously cited to support some downward judgement to the inflation profile have turned higher in recent months. These include the strong September quarter inflation outcome, an increase in some measures of capacity utilisation and a partial reversal of the fall in the quits rate, which might impart greater pressure to attract and retain staff.
We will continue to refine our assessment of full employment as more data become available. It is possible that there is more labour market capacity than we are assuming, and that we have taken too much signal from the September quarter inflation outcome and other survey indicators. At the same time, our range of models continue to point to more excess demand in the economy than we are factoring in. If we have misjudged the degree of capacity pressures in the economy, this would imply a different outlook for inflation and wages growth (see Key risk #1 and Key risk #2).
3.2 The global outlook
Major trading partner (MTP) growth is expected to slow over the second half of 2025 and into 2026 as higher tariffs weigh on activity.
Global activity this year has generally been more resilient than expected, supporting our view that the likelihood of a severe global ‘trade war’ has diminished. Year-average MTP GDP growth is forecast to be 3.6 per cent in 2025; this is higher than in August and back around the forecast at the time of the November 2024 Statement before the escalation in trade tensions (Graph 3.1).
The key driver of the upward revision to MTP growth for 2025 has been slightly stronger than expected growth in China. Year-average GDP growth in 2025 is now forecast to be 5.0 per cent, in line with Chinese authorities’ growth target. Activity in China is expected to remain relatively resilient, with the GDP forecast for next year also revised higher since the August Statement, following stronger-than-expected recent outcomes. Nevertheless, growth is still forecast to gradually slow from the current growth rate, easing to 4.6 per cent in 2026 and 4.4 per cent in 2027.
The outlook for manufacturing and real estate investment growth in China has been revised down, but the outlook for infrastructure investment growth has been revised up. Fixed asset investment in China has been weaker than expected, with the weakness being broadly based across sectors. We assess that adverse effects of trade policy and recent efforts to curb excess capacity and address below-cost pricing will continue to weigh on manufacturing investment. Weakness in the real estate sector is expected to remain a drag on aggregate growth for longer than expected at the time of the August Statement. However, recent weakness in infrastructure investment is assessed to be temporary as we expect announced stimulus measures to support increased growth from the December quarter onwards.
Consensus forecasters have also revised up their 2025 growth projections for East Asia and the United States. This is possibly because the delayed introduction of higher US tariff rates to early August provided an additional impetus to activity ahead of their implementation, or there could be more underlying resilience in the global economy than previously assessed. However, Consensus forecasters still expect quarterly growth in the United States to slow over the second half of 2025, as higher tariffs flow through to consumer prices and weigh on consumer spending.
Outside the United States and China, growth in many of Australia’s trading partners is expected to moderate from the second half of the year as higher US tariffs weigh on external demand. MTP growth is expected to slow to 3.2 per cent in 2026, before picking up a little in 2027 as the effects of tariffs on growth wane. More accommodative policy settings are also expected to support activity in our trading partners; this includes a mixture of stimulatory fiscal policy (in some east Asian and European economies) and a less restrictive stance of monetary policy in some major advanced economies. We continue to judge that the risks to global activity remain tilted to the downside, including because the impacts of the large increase in trade barriers may have been underestimated by Consensus forecasters and continued fluctuations in trade tensions may add to global uncertainty (see Key risk #3).
Most Consensus forecasters still assume that the US administration will set trade policy in a way that limits acutely adverse economic outcomes for the United States. The trade assumptions underpinning the outlook have not changed since the August Statement: country-level effective tariff rates (outside of China) are expected to stay at around 10–15 per cent (which is below the rates announced by the US administration as part of their bilateral country deals); an average US tariff rate of around 50 per cent on Chinese imports; and an average Chinese tariff rate of 30 per cent on US imports. Significant uncertainty around the trade assumption persists. Trade settings between China and the United States remain unpredictable and trade tensions have resurfaced between the United States and Canada, but there are some signs that trade tensions between the United States and trading partners in Asia have eased.
We continue to assess that global trade developments will be mildly disinflationary for Australia. Weaker growth in global demand from higher tariffs is expected to exert a little downward pressure on global export prices and the prices of goods and services imported to Australia. This assessment is broadly unchanged since the May Statement, but we continue to monitor the effects of tariffs on prices closely.
3.3 The domestic outlook
Australian GDP growth has recovered over the past year and is forecast to settle around estimates of potential growth.
GDP growth is expected to be a bit stronger over the second half of the year compared with the first half, as the recovery in private demand continues and public demand continues to support growth (Graph 3.2). Private demand has recovered over the past year, as household consumption has increased in response to a recovery in real incomes. While the central forecast is for this recovery in private demand to continue over the rest of 2025, the drivers of growth are expected to shift. In particular, the easing in monetary policy is expected to become a key driver of growth in private demand. That reflects both the three cash rate cuts from earlier in 2025 and 30 basis points of further easing embodied in the assumed market path. Public demand is expected to continue supporting growth, driven mostly by public consumption, although by less than in recent years. Growth in exports is expected to be modest over the forecast period, reflecting that mining output is not expected to increase much (given investment remains mostly sustaining in nature) and that foreign student numbers are expected to stabilise.
The level of GDP at the end of the forecast period is little changed from the August Statement. Private demand has been upgraded since the August Statement. The outlook for housing prices has been revised higher; largely reflecting that there has been more momentum in housing price growth in recent months than previously expected. Higher expected housing prices have led to upward revisions to the expected level of household consumption and dwelling investment over the forecast period. Furthermore, we no longer assume that global economic policy uncertainty will weigh a little on domestic private demand in 2025/26, given there have been few discernible signs of this to date. Partly offsetting these factors, there is around 30 basis points less easing in monetary policy embodied in the market path than was the case in August, which is expected to weigh on growth in private demand.
The higher level of private demand has been largely offset by a weaker outlook for public demand. Public investment unexpectedly declined in the first half of the year. While government budgets imply that public investment will bounce back in the near term before edging lower later in the forecast period, information from liaison contacts suggests that the level of public investment will likely decline over the next 12 months. The forecasts seek to balance these conflicting signals and assume that some of the unexpected weakness in the June quarter 2025 will persist over the forecast period. The outlook for public consumption is similar to the August forecasts.
The labour market is not expected to ease much further.
The unemployment rate is forecast to be little changed, albeit starting from a higher level than expected in the August Statement (Graph 3.3). In quarterly terms, the unemployment rate is forecast to rise slightly and then to stabilise at close to 4½ per cent over 2026 and 2027, as GDP growth stabilises at around growth in potential output. Leading indicators such as job ads, vacancies and employment intentions are consistent with this near-term outlook for the unemployment rate to increase only slightly. The underemployment rate is also expected to edge a little higher. Given the recent higher-than-expected increase in the unemployment rate, the risks around the labour market are explored in Key risk #2.
The employment-to-population ratio and participation rate are expected to be lower than forecast at the time of the August Statement but remain close to record highs. Population growth is assumed to continue to ease from the very strong growth rates over recent years (Table 3.1). The employment-to-population ratio is expected to be broadly stable from here, with employment growth matching population growth over most of the forecast period. The employment forecast assumes a pick-up in market sector employment growth as private demand growth recovers, with growth in non-market sector employment falling below the very strong rates in recent years.
The participation rate is forecast to be broadly stable. This is a change from our previous forecasts, which had assumed the participation rate would continue to increase (see Box B: Annual Forecast Review). However, while the participation rate may continue to be supported by the long-run increase in female participation, we now expect there to be less incentive to enter or remain in the labour force than in previous years. This reduced incentive reflects the lessening in cost-of-living pressures, as evidenced by the decrease in multiple job holders (from elevated levels). The lower job finding rates for both the unemployed and new labour force entrants is also expected to reduce the incentive to enter or remain in the labour force.
Demand is expected to be slightly above potential supply over the forecast period, given the market path for the cash rate, although that assessment is uncertain.
It is assessed that there will still be a little excess demand in parts of the economy and the labour market (as discussed in Key judgement #3 and Chapter 2: Economic Conditions). The staff’s assumption for potential output growth over the forecast period is little changed from August; we assume potential output increases at an annual rate of around 2 per cent over most of the forecast period. Our current forecasts for GDP growth, based on the assumption the cash rate follows the market path, imply that some capacity pressures in parts of the economy are expected to remain over the forecast period. Similarly, we judge that despite the unemployment rate easing a little in the near term, there may still be a modest degree of tightness in the labour market over the forecast period.
This assessment is highly uncertain. While there appears to be a little excess demand for output and labour, the degree is small and should be considered alongside the usual difficulties in assessing potential output and full employment. The possibility that we are misjudging the degree of spare capacity is covered in Key risk #2.
Quarterly growth in wages is expected to stabilise from early 2026.
Nominal wages growth is forecast to be slightly higher than expected in August. In the near term, this reflects information from recent agreements in the public sector. These agreements and announced administered decisions for several large awards may also contribute to some increased near-term volatility in quarterly wages growth. Overall, quarterly wages growth is expected to ease a little from early 2026 and then remain broadly steady over the rest of the forecast period. The outlook for wages growth is a little bit higher than forecast in the August Statement, given we assess there is slightly more capacity pressure in the economy and the labour market than previously thought (Graph 3.4).
Growth in unit labour costs (ULCs) is expected to ease. Growth in nominal ULCs – the measure of labour costs most relevant for firms’ cost of production and so for inflation outcomes – has been elevated in recent years, largely due to weak productivity growth. Growth in ULCs is expected to moderate over the forecast period in line with easing growth in nominal wages and a projected pick-up in productivity growth (Graph 3.5).
Underlying inflation is expected to be higher over the forecast period relative to the August Statement.
Year-ended trimmed mean inflation is expected to be above the top of the 2–3 per cent range until mid-2026, before easing to a bit above the midpoint of that range by early 2027 (Graph 3.6). In the near term, the upward revision to year-ended inflation largely reflects the stronger-than-expected inflation outcome in the September quarter. We assess that some of the quarterly increase in the September quarter is likely to be transitory and so expect quarterly inflation to decline in the December quarter.
However, we do not expect much quarterly disinflation from early 2026, reflecting the return of growth to trend and some remaining capacity constraints. As noted in Key judgement #3, we have taken some signal from the strong inflation outcome in the September quarter, such as in market services and housing, alongside other labour market and survey indicators to revise higher our assessment of capacity pressures. It is possible we have taken too much or not enough signal from the September quarter inflation outcome or, more broadly, misjudged the degree of capacity pressure in the economy (see Key risk #2). Inflation expectations are assumed to remain consistent with achieving the inflation target over the long term.
Headline inflation is also expected to be higher over the forecast period relative to the August Statement, primarily reflecting higher underlying inflation. Year-ended headline inflation is expected to increase to 3.7 per cent by mid-2026, before easing towards a bit above the midpoint of the target range at the end of the forecast period (Graph 3.7). Changes in the timing of Energy Bill Relief Fund rebates in New South Wales, the Australian Capital Territory and Western Australia are expected to add more volatility in our forecast for headline inflation relative to the August Statement. Because headline inflation can be affected by large swings in the prices of individual items, we will continue to pay close attention to underlying measures as an indicator of momentum in consumer price inflation.1
Housing inflation is expected be higher relative to the August Statement. The forecasts for new dwelling inflation for both detached houses and apartments – which makes up 7 per cent of the CPI – has been revised higher, reflecting the signal from the stronger-than-expected September quarter data, as well as upward revisions to the outlook for housing prices and dwelling investment. CPI rent inflation – which reflects the rents currently being paid by households and also has a weight of 7 per cent – is also expected to be a little higher over the forecast period, as near-term indicators of advertised rents suggest more strength in the rental market than previously assumed, which gradually passes through to the stock of rents as measured in the CPI.
In the near term, market services inflation is expected to be higher relative to the August Statement. This reflects our assessment that there will be more capacity pressure in the economy than previously thought. By contrast, the outlook for retail goods inflation is broadly unchanged from the August Statement.
3.4 Key risks to the outlook
Key risk #1 – Demand growth may either under- or over-shoot estimates of potential supply.
Demand could grow by less than potential supply for a range of reasons. One possibility is that the recent recovery in household consumption proves temporary and consumers revert to their cautious behaviour of recent years, choosing to save more of their higher incomes than assumed. Another is that labour demand turns out to be weaker than we have assessed, which would be expected to weigh on growth in private demand (see Key risk #2). Growth in private demand could also be weaker-than-expected if global policy uncertainty leads to some businesses delaying their investment decisions and households increasing their precautionary saving.
However, it is also possible that demand picks up by more than expected and exceeds growth in potential supply. While there are several sources of upside risk to the domestic activity forecast, we explore the sensitivity of activity and inflation to a stronger housing price projection. We developed a scenario in which recent housing price growth is sustained (say as a result of a bring forward in housing demand) which sees housing prices increase by an additional 10 per cent relative to the path assumed in the central forecast. Importantly, this scenario assumes no change in the cash rate relative to the market path despite the changes to aggregate demand.
An increase in housing price growth, all else being equal, would boost dwelling investment and consumption over the forecast period. The incentive to build more housing increases when the price of established housing increases relative to the cost of new housing. Furthermore, the increase in housing prices boosts household net wealth, which leads to an increase in household consumption growth (Graph 3.8).2 Overall, we estimate that a 10 per cent increase in housing prices increases the level of GDP by 0.7 per cent relative to the central forecast by the end of the forecast period.3 The boost to GDP growth also flows through to higher inflation; in particular, we would expect new dwelling inflation to rise sharply as capacity pressures in housing construction increase. Rental inflation would eventually respond to the increase in dwelling supply but this would not take place during the forecast period given the usual lags. Overall, we would expect that year-ended trimmed mean inflation would be ¼ percentage points higher than the central forecast.
Key risk #2 – We may have misjudged how much spare capacity there will be in the labour market and economy.
The degree of tightness in the labour market and the broader economy, and therefore the outlook for inflation, could evolve differently either because conditions in the labour market turn out to be stronger or weaker than our forecasts or because we have misjudged the current degree of excess demand.
Unemployment may rise by more than expected over the forecast period. The unemployment rate has increased by 0.4 percentage points over the past six months (half of which occurred in the month of September). While monthly labour market data can be volatile, it is possible that the labour market adjustment to the earlier period of below-trend growth could be more pronounced than we have forecast. There is also a risk that non-market employment growth continues to weaken following very strong growth in recent years. The trajectory of the unemployment rate will also depend on the labour supply response. If the participation rate resumes its upward historical trend and/or the job-finding rate for newcomers into the labour market continues to fall, the unemployment rate increase will be somewhat higher.
Alternatively, labour market conditions could also be stronger than anticipated over the forecast period. For example, market sector employment growth could rebound more quickly than in the forecasts, causing the unemployment rate to turn lower.
It is also possible we have misjudged the current degree of excess demand. It is possible we have not taken enough signal from recent inflation data, which could imply more capacity pressures in the economy than we have assessed. Model-based estimates of full employment and spare capacity continue to point to a tighter labour market than suggested by some other indicators. However, it may also be the case that the September quarter CPI outcome was driven mostly by factors that were temporary or less closely associated with domestic capacity pressures. For example, inflation may have picked up due to the removal of temporary discounts or the unwinding of margin squeezes. Similarly, the pick-up in food-related market services inflation may have been caused by high inflation for some food inputs. If the pick-up in inflation in the September quarter was entirely caused by temporary factors, this would imply we should have taken less signal for our assessment of capacity pressures in the labour market and economy.
Key risk #3 – Global growth may be weaker than forecast, though there are risks in both directions.
The resilience of the global economy to date has partly reflected the ability of tariff-facing economies, particularly China, to find alternative markets for their exports. While some of the observed trade redirection to date is consistent with structural changes across supply chains in Asia, and may therefore continue, it is an open question as to whether demand in these other markets – for example, in Africa and South America – will be sustained. If sustained, the global economy may continue to be more resilient than expected. On the other hand, trade barriers elsewhere may increase if there are concerns that domestic industries cannot compete with the low-cost imports.
While any further escalation of trade barriers would weigh on the outlook by more than we have currently factored in, downside risks to the global outlook also extend beyond trade barriers. An abrupt correction in global equity and fixed-income markets, some of which are trading at historically stretched valuations, also poses downside risks to growth.
In China, the risks to the domestic growth outlook (outside of trade) are balanced. There are multiple possible drivers of the recent weakness in domestic fixed asset investment, with some likely to be temporary and others more persistent. A key downside risk is that the weakness in investment reflects longer running structural factors and is more persistent than currently expected. However, there remains upside risk that stronger-than-expected fiscal support – as occurred in late 2024 – could lead to higher growth than currently forecast for 2026 and 2027. Authorities are expected to meet in the coming months to agree on the growth target for the year ahead and outline the next Five-Year Plan. This will inform our outlook for China, which is for growth to slow moderately before stabilising.
The risks around the outlook for inflation in most advanced economies appear broadly balanced. Outside of the United States, Consensus forecasters and central banks largely expect inflation to return to around targets over the next year or so, alongside labour market softness and weakness in domestic demand. Global trade developments may prove to be more disinflationary than currently expected, particularly if the recent declines in Chinese export prices persist, though any impact on inflation will also depend on the response of exchange rates. On the other hand, slow progress on services disinflation remains an upside risk to the outlook and several of Australia’s trading partners, particularly in Asia, have also announced plans for more expansionary fiscal policy, which may add more to demand than currently factored in.
3.5 Detailed forecast information
Table 3.1 provides additional detail on forecasts of key macroeconomic variables. The forecast table from current and previous Statements can be viewed, and data from these tables downloaded, via the Statement on Monetary Policy – Forecast Archive.
| Jun 2025 | Dec 2025 | Jun 2026 | Dec 2026 | Jun 2027 | Dec 2027 | |
|---|---|---|---|---|---|---|
| Activity | ||||||
| Gross domestic product | 1.8 | 2.0 | 1.9 | 1.9 | 2.0 | 2.0 |
| Household consumption | 2.0 | 2.1 | 2.1 | 2.3 | 2.1 | 2.1 |
| Dwelling investment | 4.8 | 4.8 | 3.7 | 3.1 | 2.7 | 2.5 |
| Business investment | 0.2 | 0.1 | 1.0 | 2.0 | 2.5 | 2.6 |
| Public demand | 3.0 | 2.1 | 3.6 | 3.2 | 3.1 | 2.4 |
| Gross national expenditure | 2.1 | 2.1 | 2.5 | 2.7 | 2.5 | 2.3 |
| Major trading partner (export-weighted) GDP | 3.9 | 3.2 | 3.0 | 3.3 | 3.3 | 3.3 |
| Trade | ||||||
| Imports | 1.9 | 3.1 | 4.0 | 4.5 | 3.8 | 2.9 |
| Exports | 1.5 | 2.1 | 1.4 | 1.4 | 1.9 | 1.8 |
| Terms of trade | −2.4 | 1.5 | 1.6 | −1 | −0.3 | 0.0 |
| Labour market | ||||||
| Employment | 2.2 | 1.3 | 1.1 | 1.3 | 1.4 | 1.4 |
| Unemployment rate (quarterly, %) | 4.2 | 4.4 | 4.4 | 4.4 | 4.4 | 4.4 |
| Hours-based underutilisation rate (quarterly, %) | 5.1 | 5.4 | 5.4 | 5.4 | 5.4 | 5.5 |
| Income | ||||||
| Wage Price Index | 3.4 | 3.4 | 3.0 | 3.0 | 3.0 | 3.0 |
| Nominal average earnings per hour (non-farm) | 4.9 | 4.3 | 3.9 | 3.6 | 3.5 | 3.3 |
| Real household disposable income | 4.1 | 2.2 | 2.0 | 2.5 | 2.3 | 2.2 |
| Inflation | ||||||
| Consumer Price Index | 2.1 | 3.3 | 3.7 | 3.2 | 2.7 | 2.6 |
| Trimmed mean inflation | 2.7 | 3.2 | 3.2 | 2.7 | 2.6 | 2.6 |
| Assumptions | ||||||
| Cash rate (%)(c) | 4.0 | 3.6 | 3.4 | 3.3 | 3.3 | 3.3 |
| Trade-weighted index (index)(d) | 59.7 | 61.3 | 61.4 | 61.4 | 61.4 | 61.4 |
| Brent crude oil price (US$/bbl)(e) | 66.8 | 63.8 | 63.4 | 63.4 | 63.4 | 63.4 |
| Estimated resident population(f) | 1.6 | 1.6 | 1.4 | 1.3 | 1.2 | 1.2 |
| Memo items | ||||||
| Labour productivity(g) | −0.1 | 0.9 | 0.9 | 0.8 | 0.8 | 0.7 |
| Household savings rate (%)(h) | 4.2 | 4.1 | 4.3 | 4.5 | 4.6 | 4.5 |
| Real Wage Price Index(i) | 1.3 | 0.0 | −0.5 | −0.2 | 0.2 | 0.3 |
| Real average earnings per hour (non-farm)(i) | 2.7 | 0.9 | 0.4 | 0.4 | 0.8 | 0.7 |
|
(a) Forecasts finalised on 29 October. Sources: ABS; Bloomberg; CEIC Data; Consensus Economics; LSEG; RBA. |
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Endnotes
1 See RBA (2024), ‘Box C: Headline and Underlying Inflation’, Statement on Monetary Policy, August.
2 May D, G Nodari and D Rees (2019), ‘Wealth and Consumption’, RBA Bulletin, March.
3 While not assumed, under this scenario the path for the cash rate could shift up relative to the baseline. Under this outcome, the increase in demand for housing assets would be unwound (likely beyond the forecast period), so the effect on the level of GDP, real house prices and inflation is only temporary.