The Reserve Bank of Australia (RBA) has announced another rate hold after September Consumer Price Index (CPI) data reinforced the need to remain vigilant against upside risks to the economy. inflation.
The RBA left the policy rate unchanged at 4.35 per cent for the eighth time in a row.
The market was more or less unanimous on the RBA maintaining the spot rate.
The RBA’s last rate hike took place in November last year, marking the 13th since its tightening cycle began in May 2022.
Since then, reduced average inflation has fallen from 5.1 percent year-on-year to 3.5 percent, and while in line with the RBA’s August forecast, it would have caused the central bank to adopt a cautious stance on rate cuts. .
Last month’s CPI figures changed the outlook for interest rate cuts through 2025, highlighting ongoing concerns about core inflation remaining stubbornly above the Reserve Bank’s target.
Indeed, while the latest consumer price index saw inflation fall to 2.8 percent in the 12 months to September, core inflation remained above the target of the Reserve Bank.
At the time, Gareth Aird of the Commonwealth Bank of Australia acknowledged that while September quarter CPI indicated continued disinflation, it had not grown at the pace expected on an underlying basis.
“The result is that we no longer expect the RBA to cut the policy rate in December 2024. Instead, we expect the rate to cut by 25 basis points in February 2025,” Aird previously told the era.
Similarly, Andrew Canobi, head of fixed income at Franklin Templeton, said these inflation numbers were a sign that a rate cut in 2024 was unlikely because underlying inflation and a market strong work suggests continued resilience.
Also presenting his views at the time, Dwyfor Evans of State Street Global Markets warned that underlying pricing pressures in healthcare, leisure, food and insurance indicated stubborn inflationary trends , leading him to project early 2025 as a more realistic timetable for any RBA rate. cuts.
“Consensus expectations of third-quarter disinflation cannot mask concerns that online price pressures in Australia remain persistently elevated relative to the RBA’s 2-3 per cent target,” Evans said.
“A cautious RBA could again indicate rate easing in early 2025 when it meets and publishes its monetary policy statement on November 5.”
