Australia's economy is heading for the slowdown it had to have.
With the nation's decades-long productivity growth malaise showing no sign of improving, Reserve Bank governor Michele Bullock admitted the harsh reality after the central bank's monetary policy board held interest rates steady on Tuesday.
Inflation is still too high and the only way it will subside is if economic growth slows and households wear the cost.
"We are not forecasting that the economy is going to shrink this quarter," Ms Bullock told reporters after the RBA's first meeting of the year which did not result in a rate rise.
"We are forecasting that growth is going to slow, but growth has to slow.
"The key reason for that is that we have excess demand, and unless demand grows more slowly than the supply side of the economy for a time, we're not going to get inflation down."
