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AUS: RBA on hold, clearly waiting for Q2 CPI on 31 July before updating their assessment

The RBA, as universally expected, left the cash rate on hold at a 12-year high of 4.35% but warned there were reasons to be vigilant against inflation risks, reiterating that it was not ruling anything in or out on policy. NAB expects the central bank will be closely watching Q2 CPI on 31 July before the outlook on policy.

Tapas Strickland | NAB Markets Research

Key points:

  • The RBA kept rates on hold as universally expected
  • At the margin, slightly hawkish tweaks re inflation staying higher for longer, but no explicit bias
  • Re-inserted “will do what is necessary to achieve that outcome" return inflation to target
  • Also added: “while recent data have been mixed, they have reinforced the need to remain vigilant to upside risks to inflation
  • Those insertions give framing flexibility ahead of Q2 CPI on 31 July, which comes before the next August meeting
  • Governor Bullock noted recently she was prepared to hike again if inflation reaccelerates or proves stickier, which is consistent with today’s Statement
  • However, the RBA remains concerned on the risks of very low growth– with the risk of slower consumption and higher unemployment
  • No change to NAB’s view of the RBA cutting rates in November, but risks remains that this may not occur until early 2025 depending on how the data plays out
  • Full note to follow the press conference

RBA Track Changes - Click here for a PDF of track changes.


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NAB Markets Research

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