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MNI RBA Preview-December 2024: Unlikely To Be “Confident” Yet

The RBA is unanimously expected to keep rates at 4.35% at its last meeting of 2024.
Central Bank PreviewCentral Bank ReportsRBA - PreviewAPACStoryAustraliaMarkets

EXECUTIVE SUMMARY: 

  • The RBA is unanimously expected to leave rates unchanged at 4.35% at its December meeting despite the disappointing Q3 GDP result which is likely to mean its Q4 forecast is revised down in February.
  • We expect the Board to acknowledge the weakness of private demand but keep its guidance similar to November with the Board remaining "vigilant to upside risks to inflation" and "not ruling anything in or out", as the economy develops broadly as expected.
  • The market doesn’t have a full 25bp rate cut priced in until May, which Bullock is likely to be asked about in the press conference, and analysts are increasingly forecasting the start of the easing cycle at the May 20 meeting. With the focus on quarterly inflation data, it will take time for the Board to be “confident” that inflation is “sustainably” returning to target. 

FOR THE FULL PUBLICATION PLEASE USE THE FOLLOWING LINK: RBA Preview - December 2024.pdf

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EXECUTIVE SUMMARY: 

  • The RBA is unanimously expected to leave rates unchanged at 4.35% at its December meeting despite the disappointing Q3 GDP result which is likely to mean its Q4 forecast is revised down in February.
  • We expect the Board to acknowledge the weakness of private demand but keep its guidance similar to November with the Board remaining "vigilant to upside risks to inflation" and "not ruling anything in or out", as the economy develops broadly as expected.
  • The market doesn’t have a full 25bp rate cut priced in until May, which Bullock is likely to be asked about in the press conference, and analysts are increasingly forecasting the start of the easing cycle at the May 20 meeting. With the focus on quarterly inflation data, it will take time for the Board to be “confident” that inflation is “sustainably” returning to target. 

FOR THE FULL PUBLICATION PLEASE USE THE FOLLOWING LINK: RBA Preview - December 2024.pdf