Interest Rate Hikes Unlikely as Inflation Expected to Drop: Westpac

The information on this website is general in nature and does not take into account your objectives, financial situation, or needs. Consider seeking personal advice from a licensed adviser before acting on any information.

Smirk noted, "We forecast that the June Monthly CPI Indicator will show a 0.3% increase for the month, causing the annual rate to decline to 3.6%."

Further insights from Smirk include the June quarter CPI forecast which anticipates a 1.0% quarterly increase and an annual rise of 3.8%. Meanwhile, the Trimmed Mean CPI, which filters out the most volatile price movements, is expected to be 0.9% for the quarter and 4.0% annually.

"By the end of 2024, we project the CPI to ease further to 2.9% annually, influenced by various cost of living measures," added Smirk.

The RBA's attention, according to Smirk, will likely be on the Trimmed Mean CPI because it mitigates most of the unusual fluctuations in cost of living metrics: "Trimmed Mean inflation will reduce to a pace of 3.5% annually by the end of 2024 and 2.8% annually by the end of 2025, signaling a continued moderation in inflation."

In the Minutes released from June’s RBA Board meeting, it was stated that there wasn’t sufficient evidence to alter the Bank’s stance on inflation. Although there were some surprises with the May CPI figures, wage growth appears to have plateaued, risks in the labor market appear biased downwards, and there's significant doubt regarding consumer strength.

Notably, the RBA's comments about the weakening labor market stood out: "The reduction in vacancy rates might suggest that labor market conditions are already weaker than employment trends indicate. Furthermore, the unemployment rate could increase rapidly once it begins to rise, as observed in the past."

Considering the RBA's dual objectives of price stability and full employment, concerns about the labor market shift the probability away from rate hikes.

The results of the June labor force report and the first-quarter CPI data will be crucial in determining not only the potential August rate increase but also the timing of possibly starting a rate cut cycle.

Should the unemployment rate fall lower or if the quarterly Trimmed Mean CPI exceeds 1.0%, it could challenge the RBA's current outlook.

Both Westpac and CBA predict the second quarter's Trimmed Mean CPI will be around 0.9%, which suggests that rates may remain unchanged.

Published:Wednesday, 3rd Jul 2024
Author: Paige Estritori

Please Note: We do not endorse any specific products or companies. Some content is sourced from third parties, including press releases, and may not be independently verified for accuracy or completeness.

Share this news item:

Finance News

Clear

What the Latest Rate Signals Mean for Truck Buyers

29 Jul 2026: Paige Estritori

Australia’s rate outlook is again shaping the conversation for transport operators, with recent finance market attention turning to inflation, lender competition and the timing of any future borrowing cost relief. For truck buyers, the message is cautiously positive but not simple: lower rate expectations can improve confidence, yet lenders are still focused on serviceability, cash flow and the commercial case behind each vehicle purchase. - read more

Cleaner Truck Tech Is Expanding the Finance Conversation

22 Jul 2026: Paige Estritori

The latest low-emission truck developments from overseas show that the next buying cycle will not be a simple choice between diesel and electric. For Australian operators, the more practical question is becoming: which technology fits the work, the route and the cash flow? - read more

June Truck Sales Rebound as EOFY Deals Bring Buyers Back

15 Jul 2026: Paige Estritori

Australia’s truck market has been given a timely lift, with end-of-financial-year activity helping June deliver the strongest monthly result of 2026 so far. After several softer months across new truck and van deliveries, the late-June rush suggests that many operators are still prepared to invest when the right vehicle, price and funding window line up. - read more

Farizon F3E Arrives as a Practical Electric Work Truck Option

06 Jul 2026: Paige Estritori

Farizon has put a sharper price point under Australia’s growing electric commercial vehicle market, with its new F3E electric cab chassis listed from $48,990. For small businesses, delivery operators, tradies and service fleets, the launch adds another option between a van and a traditional light truck at a time when operating costs are under close scrutiny. - read more

New DFAC Captain 45 Gives Light Truck Buyers a Fresh Value Option

29 Jun 2026: Paige Estritori

Australia’s light-duty truck market has a new challenger, with DFAC launching its Captain 45 WorkReady model into a segment long dominated by established Japanese brands. The arrival is timely: many operators are reassessing replacement cycles, cash flow and vehicle availability after a softer broader truck market and a wave of Euro 6 model updates. - read more

Click for more Finance News