Michele Bullock: The economic outlook

Speech by Ms Michele Bullock, Deputy Governor of the Reserve Bank of Australia, to Australian business economists, Sydney, 9 November 2022.

The views expressed in this speech are those of the speaker and not the view of the BIS.

I am grateful to Tom Rosewall for his excellent assistance with this speech.

Thank you for the opportunity to speak with you this evening. As our Statement on Monetary Policy was published last Friday, I would like to talk about our current outlook for the Australian economy. As many of you would understand from first-hand experience, forecasting is always difficult, but especially so over the past couple of years. Nevertheless, as I noted in a speech last month, forecasting is an important part of our monetary policy process since the RBA Board needs to form a view on how its policy decisions might impact the economy and inflation in the future.

I will start with a look back at where our forecasts stood in August and then highlight the areas in which subsequent developments have impacted the forecasts. I will then set out our current forecasts for inflation, growth and employment. Finally, I will talk about some of the ways we review our forecasts, and about the main uncertainties around the current forecasts and how they impact our thinking on monetary policy.

It is worth emphasising up front that the Board's priority is to return inflation to the 2–3 per cent band over time. Price stability is a prerequisite for a strong economy and a sustained period of full employment. This is what has driven our policy decisions to date and it is expected that further increases in interest rates will be required to meet this objective. The size and timing of future increases, however, will depend on the data.