Daily Flows

• Yesterday was unusually quiet for this close to the end of the month, with most activity centred around short-term NCDs.
• The standout rates were 5.12% for a 6-month term deposit and 5.07% for a 6-month NCD.
• Investors should be cautious of heightened demand today, with multiple banks competing for funds. Contact your Curve representative for bespoke opportunities.

Underlying Inflation on the Rise

• Underlying inflation rose to 3.5% in October, underscoring persistent price pressures and reinforcing the RBA’s cautious approach to rate cuts.
• Headline inflation remained steady at 2.1% month-on-month, largely due to electricity subsidies, but core inflation continues to exceed the RBA’s 2–3% target.
• Housing costs eased, with slower growth in rents and dwelling prices, although services inflation, at 4.8%, remains a key concern for the RBA’s inflation outlook.
• The RBA is expected to hold rates steady until at least May 2025, awaiting sustained evidence of lower inflation before considering rate cuts.
• Disinflationary trends in housing and wages suggest Q4 CPI could undershoot RBA forecasts; however, this is likely to be seen as progress rather than justification for early easing.
• With inflation forecast to rebound when subsidies expire in 2025, the RBA remains committed to managing medium-term price stability.