Monetary Policy Remains Restrictive, Tightening Working: RBA Kent

Monetary policy in Australia remains “somewhat restrictive,” with earlier tightening continuing to weigh on demand and inflation, Reserve Bank Assistant Governor Christopher Kent said in a speech. He highlighted rising borrowing costs and mortgage payments, a softer housing market, and year-to-date appreciation of the Australian dollar as signs that aggregate demand growth is slowing. Kent stressed this moderation is “intended and needed” to return inflation to target. While estimates of the nominal neutral rate are imprecise, they suggest the current stance is restrictive. Yet financial conditions reflect more than policy alone: housing has weakened more than rate increases imply, amplifying restraint, while resilient global demand tied to AI investment and higher overseas yields could offset it. The central bank will continue weighing these cross-currents as it refines its outlook and guides future decisions.

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