Kent portrayed this week’s pause as a hawkish pause rather than a dovish shift:
policy is now restrictive and earlier hikes are working, allowing time to assess
effects. The RBA has tightened 75bps this year, lifting the cash rate to 4.35%.
He said current rates are near the upper bound of many models’ neutral-rate
estimates; housing is clearly weakening and AUD appreciation is reducing import
prices, both helping ease inflation. However, weak productivity is constraining
supply, core inflation remains 3.6% (above the 2–3% target band), and upside
risks persist, so the door to further tightening is not closed.
