Economists firm on February price cut | Australian Markets
The Authorities might get its want of an rate of interest cut earlier than the upcoming Federal Election, with market economists pointing to the latest Shopper Worth Index (CPI) information as offering the fitting atmosphere for the Reserve Financial institution.
Betashares chief economist, David Bassanese mentioned the December quarter trimmed imply annual inflation price had materially shocked on the draw back relative to Reserve Financial institution expectations.
Annual imply inflation fell to three.2% with Bassanese saying this was notably decrease than the RBA’s November expectation of 3.4%.
“There’s now a good probability trimmed imply ‘underlying’ inflation may fall back to within the RBA’s 2-3% inflation goal band by June, relatively than the RBA’s present expectation of December.
“As a result – and despite still solid employment growth – there’s no question the economy deserves an interest rate cut to ease the restrictiveness of current policy settings,” Bassanese mentioned. “I anticipate the Reserve Bank will welcome these inflation results and reward hard pressed households and mortgage holders with an interest rate cut at the February 17-18 policy meeting.”
His sentiments have been echoed by Bendigo Financial institution chief economist, David Robertson who mentioned the information “opens the door for a February rate cut and validates our forecast of three cuts in 2025”.
State Avenue International Advisors APAC economist, Krishna Bhimavarapu mentioned not solely did the RBA’s most well-liked inflation metric (trimmed imply CPI) come according to SSGA’s below-the-market forecast, it’s now additionally the bottom in 12 quarters.
“This should confirm the first rate cut next month and make it consensus. The key question now is when will economic growth improve?”
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