Economy in transition: inflation persists above target, growth holds trend

Australia's economy is classified as being in transition, with trimmed mean inflation at 3.6% remaining above the RBA's 2–3% inflation target band while GDP growth holds at trend (2.6%). The labour market is neutral and monetary policy is also neutral, yet consumer sentiment registers as stressed at 35/100, creating a divergence between macro stability and household confidence. Continuation of transition is the most likely outcome at 57.3% probability, with adverse shift to stagflation at 28.8% and favourable shift to expansion at 13.9%.