However, because the output gap is now somewhat larger and will close later than we projected in July, the profile for inflation is now slightly lower. We project that total CPI inflation will remain below 2 per cent through the end of the year and be close to the 2 per cent target in 2017 and 2018.
The outlook is clouded by a number of uncertainties. These include the macroeconomic effects of the new mortgage rules, the likely path of our exports, the impacts of the federal government’s fiscal measures and the effects of the US election on business confidence.