RBA Recap

• The RBA kept its cash rate steady at 4.35%, stressing that inflation remains stubbornly high, with no rate cuts likely until at least 2025.
• Global factors like rising oil prices and China’s economic slowdown are increasing inflationary risks, while Australia’s labour market remains tight, sustaining wage growth and inflationary pressures.
• The RBA anticipates inflation may not return to the 2-3% target range until 2026, suggesting a prolonged period of restrictive monetary policy, despite market expectations of rate cuts in early 2025.

The Australian Economy

• Australia’s inflation is slowing gradually while the labour market remains tight but is beginning to ease, delaying the potential for rate cuts.
• Weak private sector demand is apparent, with declines in consumption and business confidence, though public sector spending and a favourable trade balance offer some support.
• August Monthly inflation showed a significant easing, but markets need to warry and consider the upcoming quarterly print.

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