skip to log on skip to main content
VoiceOver users please use the tab key when navigating expanded menus
Article related to:

Economy

All eyes on Feb for Aus rates

ANZ Institutional Insights

2024-08-02 00:00

A rise in headline consumer price inflation has dented hopes of an interest rate cut in Australia in 2024, according to ANZ Research Senior Economist Catherine Birch - but headline inflation and trimmed mean inflation were not strong enough to suggest a hike would be the next move from the Reserve Bank of Australia.

Speaking on the 5 in 5 with ANZ podcast, Birch said the data supported ANZ Research’s view the RBA would keep rates on hold at its upcoming August meeting.

June-quarter inflation data from the Australian Bureau of Statistics showed headline consumer prices lifted 1.0 per cent in the June quarter, in line with the previous three-month period. That took the annual rate of inflation to 3.8 per cent, up from 3.6 per cent, and further outside the RBA’s target band of between 2.0 per cent and 3.0 per cent.

Annual trimmed mean inflation, which is a measure of underlying price pressures, declined to 3.9 per cent from 4.0 per cent. This reduced the risk of the next RBA move being a hike, which markets had been concerned about.

“These results won't be enough to convince the RBA that it can't return inflation to target by 2026 under current policy setting,” Birch told 5 in 5. “Particularly given the backdrop of the ongoing slowdown in the broader economy and the labour market, as well as more central banks shifting to easing mode overseas.”

ANZ Research expects February to be the month the RBA makes its move on cuts. Market pricing now suggests traders agree

Keep up to date with 5 in 5

5 in 5 with ANZ is a daily financial markets podcast featuring the latest news, trends and insights from ANZ economists based around the world.

Hosted by New Zealand-based journalist Bernard Hickey, 5 in 5 with ANZ explores market trends, insights, and data releases in a way that arms listeners with the information they need to start the day.

ANZ’s International network provides a unique opportunity to connect listeners with insights from specialists on-the-ground. It features the voices of ANZ’s team of economists as well as foreign exchange, rates and commodities experts.

Episodes drop weekdays at about 6am Australian eastern standard time, and you can find them on Apple, Spotify, Substack and more.

You can click here to find out more and listen to the latest episode.

 

Birch said it was likely the RBA would want to see a reduction in domestic pressures continue over the second half of 2024 before it considered cutting.

“That's a key reason why we don't see the RBA cutting rates for the first time until February next year,” she said.

Outside Australia, the United States Federal Reserve held rates steady at its August meeting, while the Bank of England lowered its rate by 25 basis points.

You can listen to the podcast to find out more.

anzcomau:article-hub/topic/economy
All eyes on Feb for Aus rates
Staff writer
ANZ Institutional Insights
2024-08-02
/content/dam/anzcom/images/article-hub/articles/institutional/2023-07/standard-5-in-5-story-thumb.jpg
Sign up
Icon of ANZ logo coming out of an envelope

Receive insights direct to your inbox

 

Related articles

This publication is published by Australia and New Zealand Banking Group Limited ABN 11 005 357 522 (“ANZBGL”) in Australia. This publication is intended as thought-leadership material. It is not published with the intention of providing any direct or indirect recommendations relating to any financial product, asset class or trading strategy. The information in this publication is not intended to influence any person to make a decision in relation to a financial product or class of financial products. It is general in nature and does not take account of the circumstances of any individual or class of individuals. Nothing in this publication constitutes a recommendation, solicitation or offer by ANZBGL or its branches or subsidiaries (collectively “ANZ”) to you to acquire a product or service, or an offer by ANZ to provide you with other products or services. All information contained in this publication is based on information available at the time of publication. While this publication has been prepared in good faith, no representation, warranty, assurance or undertaking is or will be made, and no responsibility or liability is or will be accepted by ANZ in relation to the accuracy or completeness of this publication or the use of information contained in this publication. ANZ does not provide any financial, investment, legal or taxation advice in connection with this publication.

Top