RBA Recap

• The RBA maintained the cash rate at 4.35% in August, despite global rate cuts and market volatility, with a slightly hawkish stance.
• Their August Statement on Monetary Policy forecasts the rate to stay at 4.35% until early 2025, then gradually decline to 3.3% by late 2026.
• Unlike other central banks, the RBA is cautious about cutting rates due to concerns about inflation and prefers a gradual approach.

The Australian Economy

• Recent inflation data showed an undershoot in Q2, easing market fears and eliminating the likelihood of an RBA rate hike. The trimmed mean inflation rate increased slightly, but concerns remain around housing and insurance prices remains.
• The labour market is gradually cooling with a high participation rate and a slight rise in unemployment.
• With a gradual slowing of demand and inflation heading in the right direction, the RBA comes closer and closer to pulling off a fabled ‘soft landing’ if they avoid any surprises and are able to time cash rate cuts well.

Please click here to download the August Insights