The RBA kept the cash rate at a 12-year high of 4.35%, as expected, where they have been since a hike in November last year. Here’s what you need to know:
Wrapping up its June meeting, the RBA Board repeated that it was “not ruling anything in or out” on policy, implying a neutral stance. Policymakers also reiterated "the need to remain vigilant to upside risks to inflation."
It also noted recent domestic economic data had been “mixed”, with inflation remaining above target, despite “slow” economic (GDP) growth, rising unemployment and “weaker-than-expected” wages growth.
Policymakers added, “Recent budget outcomes may also have an impact on demand, although federal and state energy rebates will temporarily reduce headline inflation,” while conceding that “the persistence of services price inflation is a key uncertainty.”
A first quarter-point easing is not fully priced until April 2025, with only 52 basis points of cuts seen by the end of 2025.
Australian shares advanced on Tuesday. The S&P/ASX 200 index eased from session highs of 7,780.4 points just ahead of the RBA’s decision to 7,764 points but was up 71 points or 0.9% to 7,771.6 points at the time of writing.
CommBank (CBA) Group economists believe the August Board meeting is potentially ‘live’ following the release of June quarter consumer prices. Our base case sees the RBA on hold until November 2024 where we have pencilled in the start of an easing cycle.
To learn more about today’s interest rate decision, listen in to the evening episode of the CommSec Market update. Available wherever you get your podcasts.
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