Commonwealth Bank of Australia rgue that the RBA's latest household consumption forecasts, updated in August, "look too rosy".
CBA point to the 1.1% rebound in household consumption the RBA is projecting, and argue:
This represents a significant increase compared to the 0.3% growth seen in the first half of the year.
Such a sharp rise in spending growth hasn't been reflected in CBA's internal data up until late September.
It also doesn't align with the current cautious spending patterns, given the ongoing low consumer confidence.
CBA conclude:
- We expect the RBA will need to downwardly revise their consumption forecasts in November.
- Indeed, the RBA this week already noted that there are downside risks to this forecast
- Such a shift, alongside an expected further lift in unemployment and trimmed mean inflation in line with our forecasts, would set up the RBA to deliver rate relief before year-end
CBA is forecasting a 25bp rate cut at the RBA 9 - 10 December meeting.
We had the most recent RBA meeting this week, the first line in that pic above, with two more coming this year then 3 in H1 of 2025.