RBA’s Kohler sees inflation returning to target range in 2025

Reserve Bank of Australia (RBA) Head of Economic Analysis Marion Kohler spoke at the Australian Business Economists Annual Forecasting Conference in Sydney early Tuesday.

The RBA’s Kohler highlighted uncertainty within current inflation projections for the Australian economy, but expects price growth to ultimately return to heel sometime in 2025.

Key highlights:

• Inflation to return to target range in 2025, and reach the midpoint by 2026.
• It will still take some time for Australian inflation to reach the 2-3% target.
• Inflation is coming down slowly, but remains far too high.
• Australian labor market remains too tight compared to historical norms.
• RBA’s Kohler sees signs of easing wage pressures, particularly in business services.
• Expects further adjustments in labor market to occur via a drop in average hours worked.