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MNI RBA Review-December 2024: Confidence Key To Easing

The RBA left rates unchanged at 4.35% as expected but the tone of the statement shifted in a dovish direction.
Central Bank ReviewRBA -ReviewCentral Bank ReportsAPACStoryAustraliaMarkets

EXECUTIVE SUMMARY: 

  • The RBA left rates unchanged at 4.35% as expected but the tone of the statement shifted in a dovish direction. The phrase “not ruling anything in or out” was removed from the statement, which is likely the first step towards easing. The Board is also no longer “vigilant to upside risks to inflation”. 
  • Governor Bullock made it very clear that she doesn’t know when the easing discussion will begin and when there will be a cut, and that the Board will remain data driven. Quarterly CPIs are not the only information it will look at but also monthly jobs and consumption data.  
  • The next RBA meeting is on February 18, which will include an updated outlook, and Q4 CPI is on January 29 and Q4 retail sales volumes on February 3. Q4 wages and GDP will print before the April 1 meeting.
  • A 25bp rate cut is now more than fully priced for April, with market expectations at 117%. Expectations for the September meeting have softened by 50bps since mid-November, reflecting concerns about weakening domestic economic growth. 

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

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EXECUTIVE SUMMARY: 

  • The RBA left rates unchanged at 4.35% as expected but the tone of the statement shifted in a dovish direction. The phrase “not ruling anything in or out” was removed from the statement, which is likely the first step towards easing. The Board is also no longer “vigilant to upside risks to inflation”. 
  • Governor Bullock made it very clear that she doesn’t know when the easing discussion will begin and when there will be a cut, and that the Board will remain data driven. Quarterly CPIs are not the only information it will look at but also monthly jobs and consumption data.  
  • The next RBA meeting is on February 18, which will include an updated outlook, and Q4 CPI is on January 29 and Q4 retail sales volumes on February 3. Q4 wages and GDP will print before the April 1 meeting.
  • A 25bp rate cut is now more than fully priced for April, with market expectations at 117%. Expectations for the September meeting have softened by 50bps since mid-November, reflecting concerns about weakening domestic economic growth. 

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