Central Banks

RBA Should Abandon New 2.5% Inflation Goal, TCorp’s Redican Says

Following the Australian central bank’s first interest-rate cut in more than four years, Reserve Bank of Australia Deputy Governor Andrew Hauser joins Bloomberg for a wide-ranging interview. Hauser stressed that the central bank won’t ease as aggressively as markets anticipate and flagged the potential impact of global geopolitical uncertainties. He speaks with Haidi Stroud-Watts in Sydney on The China Show.Source: Bloomberg

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By Swati Pandey

June 29, 2025 at 8:00 PM UTC

Australia’s central bank should ditch a new goal of hitting the midpoint of its 2-3% inflation band as the benchmark imposes unrealistic expectations on policymakers, according to Brian Redican, chief economist at sovereign investment manager TCorp.

“The focus on ‘2.5%’ provides a false sense of precision about the ability of monetary policy to deliver a particular inflation rate two years ahead,” Redican said in a note Monday. “Inflation will be more affected by what happens with oil prices or Donald Trump’s trade policies than if the cash rate is 4.1% or 3.85%.”