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RBA interest rate meeting
Date: Tuesday, October 3 at 2.30 pm AEST
At its meeting in September, the RBA kept its cash rate on hold at 4.10% for a third consecutive month. The decision to keep rates on hold is to allow the Board further time to assess the impact of a cumulative 400bp of rate hikes and evidence that a sustainable rebalancing between supply and demand is underway.
The recently released Monthly CPI indicator showed headline inflation rose to 5.2% YoY in August from 4.9%, its first rise in four months. Trimmed mean inflation was unchanged at 5.6% YoY, while the “ex volatiles & travel” measure slowed to 5.5% YoY from 5.8% YoY.
The latest inflation report, the outcome of the latest Enterprise Bargaining Agreements, into a tight labour market, and surging energy prices strongly suggest that upside risks to inflation are rising.
Nonetheless, we expect the RBA to keep rates on hold in October at 4.10% for a fourth consecutive month, with new RBA Governor Bullock expected to preside over a mostly unchanged statement.
We then look for the RBA to deliver a final 25bp rate hike in November, which would take the cash rate to 4.35%. The main risk to this call is the jobs report for September (October 20th) and the Q3 inflation report (October 25th).
RBA cash rate chart
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