Long-term macroeconomic outlook

The long-term growth outlook for Australia suggests that GDP growth will likely run below trend, although recession is not expected. Lower income and highly-indebted households, as well as rate-sensitive sectors, are experiencing pockets of stress. Australia has been lacking in the inflationary cycle due to inertia in the wage setting process, and the progress in reaching the RBA's inflation target has been slower compared to peer countries. While the RBA has already raised the policy rate, there is disagreement among investors regarding its appropriate level. A further increase in the cash rate is expected, followed by a period of monetary policy stability until cuts begin in 2025.