James Morley

The RBA should signal that the policy rate is expected to remain close to the effective lower bound until measures of inflation expectations, such as the break-even 10-year inflation rate (which was at 1.3% annual rate in September 2019), return to the high end of the target range of 2-3%. This would likely lead to further depreciation of the exchange rate and lower current and future real interest rates. By doing so, it should help offset the unanticipated effects of the recent undershooting of the target range for inflation in terms on future levels of prices and wages in the Australian economy. The maintenance of such low rates could be expected to last more than 6-8 quarters.

Outcome date: 
Monday 03 February 2020
Current rate: 
12 months: 
6 months: 
Surname: 
Morley

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