The Australian economy continues to operate at a high level of capacity utilization, supported by a robust labor market, according to an analysis of the nation’s economic structure. Despite concerns over inflation, indicators suggest that goods price inflation is easing while service prices are rising briskly.
As of Tuesday, the central bank has underscored its firm resolve to guide inflation back to its target. Central estimates indicate a falling Consumer Price Index (CPI) inflation, with a targeted range of 2-3% by late 2025. This comes as the economy is experiencing sustained elevated levels of inflation, even after peaking.
However, there are significant uncertainties surrounding these estimates. These uncertainties may necessitate further monetary tightening to establish a sustainable supply-demand balance and assist the receding inflation trend.
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