URGENT UPDATE: The Reserve Bank of Australia (RBA) is under scrutiny as Governor Michele Bullock prepares to address the federal parliament’s economics committee on Monday. This crucial appearance marks her first since the RBA began cutting interest rates in February and comes just days ahead of the release of key inflation data.
The Australian Bureau of Statistics is set to unveil the August inflation figures on Wednesday, which are expected to provide insights into Australia’s economic climate. Analysts predict a slight decline in the RBA’s preferred measure of underlying inflation, forecasted to drop to between 2.5 and 2.6 percent. However, experts warn this decrease may not be sufficient to prompt a rate cut during the RBA’s upcoming meeting at the end of the month.
According to AMP Chief Economist Shane Oliver, while inflation trends indicate the RBA is on course for future cuts, the current figures are unlikely to lead to an immediate reduction in rates. “Inflation will be consistent with the RBA remaining on track for further rate cuts, but it won’t be enough to tip the RBA over into cutting in September,” Oliver stated.
Currently, underlying inflation stands at 2.7 percent, resting at the upper end of the RBA’s target range. This measure, which excludes volatile costs such as housing and energy, is pivotal for understanding broader economic trends. To consider a rate cut, the RBA would likely need this figure to fall to 2.4 percent.
As the market anticipates the RBA’s decisions, experts suggest that the central bank may hold off on cuts until November. Concerns linger regarding sluggish productivity and the RBA’s proposed changes to card payment surcharges, which Bullock will address during her testimony.
This news comes as inflation has been gradually declining since its peak in late 2022. The RBA projects that consumer price increases will stabilize around the middle of its target band of 2-3 percent over the coming years.
In related financial news, Wall Street has shown an upswing, with major US indices closing higher last Friday, reflecting investor confidence amid positive earnings reports from companies like FedEx. Australian share futures gained 24 points, or 0.27 percent, to 9,186, while the benchmark S&P/ASX200 rose 28.3 points, or 0.32 percent, to 8,773.5.
As the situation develops, all eyes will be on Monday’s parliamentary hearing, which could reshape expectations for Australian mortgage holders and the broader economy. Stay tuned for updates as we continue to follow this critical story.
