RBA maintained cash rate target at 4.35%, aligning with broad market expectations. The hawkish stance has seen a slight moderation, with the acknowledgment that “a further increase in interest rates cannot be ruled out,” hinting at a cautious approach rather than a definitive shift towards a neutral bias.
The updated economic forecasts paint a picture of gradual moderation in inflation pressures. Headline CPI is expected to decelerate from 4.1% at the end of 2023 to 3.2% by the close of 2024, reaching 2.8% at the end of 2025, and further softening to 2.6% by mid-2026.
Trimmed mean CPI mirrors this downward trend, projected to ease from 4.2% at the end of 2023 to 3.1% by the end of 2024, and gradually declining to 2.8% by December 2024, and then 2.6% by June 2026.
Additionally, RBA’s outlook for cash rate assumes a decrease to 3.9% by the end of 2024, followed by a further reduction to 3.4% by the end of 2025, and eventually reaching 3.2% by mid-2026. This assumption aligns with the expectations derived from surveys of professional economists and financial market pricing.
On the growth front, RBA projects a modest GDP expansion of 1.8% in 2024, with an improvement to 2.3% in 2025.
Full RBA Statement and SoMP.
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