CBA have moved their expected timing of the first Reserve Bank of Australia rate cut from November 2024 to December 2024
- expect a 25bp cut
- recent strength in employment growth coupled with still relatively hawkish rhetoric from the RBA Governor means we now see December as the more likely month for the start of normalising the cash rate
CBA reasoning:
- continue to forecast the Q3 24 trimmed mean CPI to print below the RBA’s expectations
- December Board meeting will be held after the Q3 24 national accounts have been released , which means the Board will have full visibility on how the Australian economy performed over the September quarter
- We expect the Stage 3 tax cuts to have only a minimal positive impact on household consumption in Q3 24 . This in turn should leave the RBA more assured that inflation will return sustainably to the target band , thereby opening the door for a December rate cut .
- We expect the RBA will commence an easing cycle before it declares we have hit full employment given policy is currently restrictive - waiting until the destination is reached before normalising the cash rate means unemployment will rise by more than is both necessary and desired
- We continue to look for 125bp of RBA easing by end - 2025 that would take the cash rate to 3.10%
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The remaining meeting dates this year and a look at those for H1 next year:
