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Investing.com -- Australia’s central bank may hold off on further interest rate cuts due to stronger consumer spending and inflation concerns, Reserve Bank of Australia Governor Michele Bullock indicated Wednesday.
Speaking at a Nomura event in Washington, Bullock said recent data on home building costs and market services suggested core inflation might have been higher than expected in the third quarter.
"Latest data suggest consumption has been a little stronger than we thought," Bullock stated, adding that these developments combined with firmer consumption data had given the RBA board time to judge "whether there was more easing to come or not."
Bullock described Australia’s current monetary policy as "marginally tight" rather than "really restrictive," noting that models suggest a neutral interest rate of about 3.0%, though this estimate carries significant uncertainty.
The central bank governor also commented on Australia’s economic conditions, saying the output gap is "probably close to balance" but difficult to judge precisely. She warned that slower productivity means the economy and wages "can’t grow as quickly" as they otherwise might.
Regarding global economic conditions, Bullock observed that financial markets currently hold "a very Goldilocks view" of the global economic outlook, suggesting investors may be overly optimistic about economic prospects.
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