There will be three more meetings in 2025 to determine the cash rate and Commonwealth Bank’s senior economist Belinda Allen told Yahoo Finance there is one with the greatest potential for another cut: November.
The RBA board said there wasn’t enough consumer price index (CPI) data to warrant a reduction when it delivered a shock hold in July.
However, since then, the Australian Bureau of Statistics (ABS) released a quarterly inflation reading that indicated inflation was under control.
Trimmed inflation, the metric that the central bank uses in its interest rate decisions, fell from 2.9 to 2.7 per cent, which puts it in the RBA’s target zone of 2-3 per cent.
And, everyone is confident we will get an August cut.
But this cyclical approach may not bode well for a September reduction.
The quarterly data won’t be out by then.
“We generally think their cautious approach means they’re waiting for the quarterly CPI and a quarterly forecast refresh,” Allen told Yahoo Finance.
But, we will have a new set of CPI data before the board meets in November.
“To deviate from that quarterly cadence, it would have to take a real big surprise in the data, as we know they’re still a bit reluctant to rely on the monthly CPI,” she said.
“Unless you see, for example, a material lift in the unemployment rate, they’ll stick to that once a quarter easing cycle.”