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Perth Now
25-07-2025
- Business
- Perth Now
Warning ‘nervous' RBA could hold rates
A big four bank is warning mortgage holders a 'nervous' RBA could hold interest rates again in August as it looks to kill off inflation. Westpac chief economist Luci Ellis says Tuesday's release of minutes of the Reserve Bank's July meeting and the governor's keynote speech on Thursday reaffirm a rate cut in August is not a lock. 'The monetary policy board clearly remains nervous about inflation and some members want to see actual data to support their expectation that it is still declining towards 2.5 per cent, the midpoint of the RBA's 2-3 per cent target range,' Ms Ellis wrote in an economic note on Friday. 'For this reason, we cannot lock in the cash rate cut in August just yet.' Despite warning a cut is not a guarantee, Ms Ellis did concede the most likely outcome was a rate reduction in August. Homeowners are warned a rate cut in August is not guaranteed. NewsWire / Nicholas Eagar Credit: NewsWire Traders have priced in an August rate cut as a near certainty and all 29 market economists surveyed by Bloomberg say the official cash rate will be reduced by 25 basis points. The market in total expects 75 basis points worth of cuts by March 2026, bringing the official cash rate down from 3.85 to 3.10 per cent. While economists have been factoring in falling inflation and rising unemployment as a sign to cut, Ms Ellis said they shouldn't be pricing it as a certainty. 'Monetary board members who are still nervous about supply constraints and tight labour markets will want to tread slowly,' Ms Ellis said. In her speech to the Anika Foundation on Thursday, RBA governor Michele Bullock said the board would take a measured and gradual approach to future rate cuts. Ms Bullock pointed out year-end trimmed mean – which shows the underlying inflation rate by stripping out the more volatile parts of the economy, including fuel and energy prices – came in at just under 3 per cent for the first time since 2021. 'The monthly CPI Indicator data, which are volatile, suggest that the fall may not be quite as much as we forecast back in May,' she said. 'We still think it will show inflation declining slowly towards 2.5 per cent, but we are looking for data to support this expectation.' ANZ also came out with a warning saying the next round of CPI data – to be released next Wednesday – could derail an interest rate cut. ANZ said there is a key quarterly inflation figure to watch. Christian Gilles / NewsWire Credit: News Corp Australia ANZ economists say the central bank will be comfortable cutting should the quarterly trimmed mean figures come in at 0.6 per cent or 2.7 per cent for the year. But if the number comes in at 0.8 per cent or higher or an annualised rate of 3 per cent they say a cut is unlikely. Ms Bullock also said the labour market remained tight and the uptick in unemployment from 4.1 to 4.3 per cent in June was not a surprise to the central bank. Asked if seeing the June unemployment figures, which came out after the RBA's board meeting, would have swayed the board's decision Ms Bullock said: 'I don't think so'. 'The monthly numbers pop up and down … Our quarterly forecast for the unemployment rate to drift up to 4.2 per cent in the June quarter is pretty much on the mark,' Ms Bullock said. Ms Bullock also said economists overreacted to the figure and it wasn't the 'shock' they were calling it. 'Some of the coverage of the latest data suggested this was a shock – but the outcome for the June quarter was in line with the forecast we released in May,' she said. She said the board wanted to see a gradual easing in labour market conditions, that has so far been most evident in fewer job vacancies, reductions in hours worked and declining rates of voluntary job switching.
Sky News AU
24-07-2025
- Business
- Sky News AU
RBA backing 'gradual and modest' rate cuts, ANZ chief economist Richard Yetsenga declares after Michele Bullock's speech
Aussie mortgage holders waiting for a flurry of interest rate cuts could have their hopes dashed after Reserve Bank of Australia governor Michele Bullock stood firm on the central bank's controversial rate hold. Ms Bullock addressed the annual Anika Foundation event on Thursday where she said the RBA had expected the unemployment rate to rise in June and noted inflation was declining alongside its forecast. "Last week brought us the latest labour market data, which confirmed that the unemployment rate increased in the June quarter," Ms Bullock said. "Some of the coverage of the latest data suggested this was a shock, but the outcome for the June quarter was in line with the forecast we released in May.' The Australian Bureau of Statistics revealed unemployment jumped 0.2 per cent to 4.3 per cent in June, exceeding market expectations and leading some to question the recent hold. ANZ chief economist Richard Yetsenga was in attendance, and said the RBA governor would likely deliver near term rate relief, but this would not be the start of a cutting spree. 'You would say almost certainly we'll get a cash rate cut next month,' Mr Yetsenga told Business Now on the sidelines of the event. 'But the tone of the speech today I think was consistent with easing still being pretty gradual and modest. 'The market's pricing three, nearly four rate cuts. I don't think the speech was consistent today with that many.' Ms Bullock backed in the rationale behind the central bank's shock rate hold, telling reporters the call came down to 'timing' of inflation data. 'We expect trimmed mean inflation to fall a little further in the June quarter in year-ended terms,' the RBA governor said. 'However, the monthly CPI Indicator data, which are volatile, suggest that the fall may not be quite as much as we forecast back in May. 'We still think it will show inflation declining slowly towards 2.5 per cent, but we are looking for data to support this expectation. 'Encouragingly, as inflation has slowed, the labour market has eased only gradually and the unemployment rate is relatively low.' Every major bank predicts the RBA will cut rates in August and forecasts at least one other cut this year. Westpac predicts the RBA will drop rates four times up until 2026, bringing the cash rate down a full per cent, while CBA and ANZ forecast the cash rate to drop to 3.35 per cent by November. NAB is tipping three more cuts to bring the cash rate down to 3.1 per cent by February. The RBA held the cash rate at 3.85 per cent in July after cutting twice since the beginning of the year.
Fibre2Fashion
08-07-2025
- Business
- Fibre2Fashion
Reserve Bank of Australia keeps cash rate unchanged at 3.85%
The Reserve Bank of Australia (RBA) has decided to keep the cash rate target steady at 3.85 per cent during its latest board meeting, citing continued moderation in inflation and the need for more data to confirm a sustainable return to the 2.5 per cent target. Headline inflation has eased significantly from its 2022 peak, supported by earlier rate hikes that have helped rebalance demand and supply. In the March quarter, headline inflation fell within the RBA's 2–3 per cent target range, while trimmed mean inflation stood at 2.9 per cent. However, recent data from the monthly CPI Indicator came in marginally stronger than expected, prompting the Board to adopt a cautious wait-and-see approach. RBA held the cash rate at 3.85 per cent, citing moderating inflation and ongoing economic uncertainty. While inflation has eased, recent data showed slightly stronger-than-expected figures. The RBA is cautious amid global trade tensions and tight domestic labour markets, awaiting further data to confirm a sustainable path to its 2.5 per cent inflation target. 'Monetary policy is well placed to respond decisively to international developments if they were to have material implications for activity and inflation in Australia,' the RBA's Monetary Policy Board stated in a statement. The outlook remains clouded by global economic uncertainty, particularly around trade tensions and policy responses—most notably the impact of pending US tariffs. Despite improved financial market sentiment, the RBA acknowledged potential headwinds from delayed business and consumer spending. Domestically, household incomes have risen, private demand is gradually recovering, and some financial stress indicators have eased. Yet, businesses in certain sectors continue to struggle with weak demand and limited pricing power. Labour market conditions remain tight, with low underutilisation rates and ongoing labour shortages. Although wage growth has cooled, productivity gains remain elusive, keeping unit labour costs elevated. The RBA reiterated its commitment to price stability and full employment, signalling close monitoring of inflation trends, labour market conditions, and global risks. The Board said it would remain data-dependent in future policy decisions and stands ready to adjust settings if economic conditions shift significantly. Fibre2Fashion News Desk (KD)
CNBC
08-07-2025
- Business
- CNBC
Australia unexpectedly holds policy rate as it awaits more inflation data
Australia's central bank held its policy rate at 3.85%, saying it needed more time to assess inflation data. Economists polled by Reuters had been expecting a cut of 25 basis points to 3.6%. In its statement Tuesday, the Reserve Bank of Australia said it was waiting for "a little more information to confirm that inflation remains on track to reach 2.5 per cent on a sustainable basis." "While recent monthly CPI Indicator data suggest that June quarter inflation is likely to be broadly in line with the forecast, they were, at the margin, slightly stronger than expected," the central bank added. Australia's inflation came in below expectations at 2.1% in May, the lowest since October 2024. In the first quarter, inflation was at 2.4%, staying at a four-year low. Just after the data release, the S&P/ASX 200 index fell 0.24%, while the Australian dollar strengthened 0.79%. Australia is currently struggling with a growth slowdown as public spending shrinks and as consumer demand and exports weaken. The country recorded a 1.3% expansion in the first quarter of the year, missing Reuters poll expectations of 1.5%.
