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
Source: Paige Estritori

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

Share this news item:

Finance News

Clear

Volvo and CEFC Collaborate on $70 Million Electric Truck Financing Initiative

17 Feb 2026: Paige Estritori

In a significant move towards sustainable transportation, Volvo Group Australia has partnered with the Clean Energy Finance Corporation (CEFC) to introduce a $70 million financing package aimed at accelerating the adoption of battery electric trucks (BETs) across the nation. This initiative seeks to address the financial barriers that have traditionally hindered the uptake of electric heavy vehicles. - read more

CEFC's $6 Million Investment Powers Woolworths' Electric Delivery Fleet

17 Feb 2026: Paige Estritori

The Clean Energy Finance Corporation (CEFC) has announced a $6 million investment to support the deployment of 60 battery electric trucks (BETs) for Woolworths' last-mile deliveries in New South Wales and Victoria. This initiative is part of a broader effort to reduce emissions in the transport sector and promote the adoption of electric vehicles in commercial operations. - read more

Australian Truck Market Demonstrates Resilience with Strong Year-End Performance

17 Feb 2026: Paige Estritori

The Australian truck and van market concluded 2025 with a robust performance, despite facing a 9.5% decline compared to the previous year's record figures. According to the Truck Industry Council (TIC), a total of 48,617 heavy vehicles were sold throughout the year, marking it as the third-best year on record for the industry. - read more

Australian Trucking Association Challenges Proposed Fuel Tax Hike

09 Feb 2026: Paige Estritori

The Australian Trucking Association (ATA) has strongly opposed the Productivity Commission's proposal to phase out fuel tax credits for trucking operators, a move that would effectively double the fuel tax paid by the industry. ATA Chair Mark Parry highlighted that such an increase would raise the effective fuel tax from 32.4 cents to 66.1 cents per litre by 2035. - read more

Australia's First Major Electric Truck Charging Hub Set for Melbourne

09 Feb 2026: Paige Estritori

In a landmark development for Australia's freight industry, energy company Mondo, with support from the Australian Renewable Energy Agency (ARENA), is set to establish the nation's first major electric truck charging hub in Melbourne's Laverton North. The project, slated for completion by late 2026, represents a significant step towards reducing emissions in road freight. - read more

Click for more Finance News