The RBA’s policy settings are inconsistent with their forecasts. The November SMP projects that inflation will remain above the 2-3% target throughout the forecast horizon while unemployment remains below the NAIRU.

A faster pace of interest rate increases would bring both inflation and unemployment closer to their targets.

The sooner we stabilise inflation and unemployment, the less risk there is of a substantial increase in expected inflation, which would lead to a large increase in unemployment.

The absence of a meeting in January also supports a larger than usual increase this meeting.