A note this week from National Australia Bank shifting forward their projection for the RBA:
- We have brought forward our expectations for the timing of rate cuts, now seeing a first cut in February 2025 (previously May)
- we continue to see a gradual pace of cuts back to 3.10% by early 2026
Main points from the note, in summary:
- Nov/Dec cuts ruled out despite GDP growth near 1.0% y/y
- Capacity utilization remains elevated
- Inflation risks prompt delay in first cut timing
- Q3 CPI expected at 0.8% q/q (3.5% y/y) trimmed mean
- Labor market holding stronger than expected; unemployment to stabilize ~4.5%
RBA seen engineering soft landing with gradual normalization as inflation subsides while maintaining full employment. Labor market resilience and above-target inflation warrant cautious approach despite slowing growth.
NAB highlight the next key event as Q3, due October 30 – will be impacted by subsidy effects but the detail should show steady progress on inflation.
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The Reserve Bank of Australia meet on November 4 and 5, then December 9 and 10.
Meetings next year for the RBA