Interest Rate Hikes Unlikely as Inflation Expected to Drop: Westpac

5

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
Source: Paige Estritori

Please Note: If this information affects you, seek advice from a licensed professional.

Share this news item:

Finance News

Clear

CEFC and Volvo Group's $70 Million Initiative to Boost Electric Truck Adoption

31 Dec 2025: Paige Estritori

The Clean Energy Finance Corporation (CEFC) has partnered with Volvo Group to introduce a $70 million financing package aimed at accelerating the adoption of heavy-duty battery electric trucks (HD BEVs) in Australia. This initiative seeks to address the substantial transport-related emissions by facilitating the transition to cleaner vehicle technologies. - read more

Scania's First Electric Truck Joins Total Logistics Solutions Fleet

31 Dec 2025: Paige Estritori

Total Logistics Solutions (TLS), a rapidly growing Australian logistics provider, has taken delivery of its first battery electric truck from Scania. This milestone marks a significant step towards greener last-mile deliveries in urban areas. - read more

Kia's Tasman Ute: A New Contender in Australia's Pickup Market

31 Dec 2025: Paige Estritori

Kia has expanded its vehicle lineup in Australia with the introduction of the Tasman, a mid-size pickup truck designed to compete in the highly competitive ute segment. The Tasman is built on a body-on-frame chassis and is powered by turbocharged four-cylinder petrol and diesel engines. - read more

Isuzu Australia Introduces Dedicated Financial Services for Truck Buyers

23 Dec 2025: Paige Estritori

In a strategic move to bolster its customer support offerings, Isuzu Australia Limited (IAL) has announced the establishment of Isuzu Financial Services Australia (IFSA). This initiative marks the first time the Isuzu Group has founded a leasing company outside Japan, reflecting a significant commitment to the Australian market. - read more

Geely's Farizon Electric Trucks Make Australian Debut

23 Dec 2025: Paige Estritori

Chinese automotive giant Geely Auto has announced its entry into the Australian light commercial vehicle market through its Farizon brand, specialising in electric commercial vehicles. This move signifies a notable expansion of electric vehicle (EV) offerings in Australia's commercial sector. - read more

Click for more Finance News