‘RBA cash rate will remain unchanged throughout the year’, says Bendigo Bank

As discussed in the bank’s July Economic Update, Bendigo Bank’s chief economist David Robertson said a rate cut is likely to come some time in 2025.

“While the May data does increase the probability of another RBA hike in the coming months, our key takeaway from the data was that it further defers RBA cuts, rather than necessarily implying another rate hike,” said Roberston.

“As we’ve outlined here and in our Business Insights website since early 2023, we see relief via RBA rate cuts as a 2025 event, so we’re not surprised that markets (and most economists) are no longer pricing in cuts this year, but the market is now assigning around a 50 per cent probability to another hike which is a long bow to draw on a single monthly CPI read.

“Nevertheless, we have pushed back our first RBA cut from next February to May 2025, given the even slower progress for disinflation than hoped.”

Further adding to the good news are reports of falling inflation across the globe. Coupled with the now underway stage 3 tax cuts, Aussies may finally be getting a much-needed break from economical pressure.

The quarterly inflation data due at the end of the month will provide more accurate insight, said Robertson, but with rate cuts in both Europe and Canada, signs are hopeful. He said the RBA would consider a broad range of data in reaching its decision and would not lose sight of its dual mandate of price stability and full employment.

“This means upcoming jobs data will be almost as influential as inflation data. The next labour force report out on 18 July will be important for policy settings. Our expectation is the unemployment rate moving gradually higher, but the RBA remain data dependent, so any surprises with this or from the quarterly CPI data later in July will be closely scrutinised,” Robertson said.

“Beyond speculation on interest rates, economic conditions remain uneven and in some respects contradictory. We’re seeing record highs for property prices, stock markets and levels of employment, but we remain in a per-capita recession and consumer sentiment is lower than it was in the pandemic or the GFC, so with household budgets stretched tax cuts are arriving at the right time.”

[Related: RBA tipped to embrace ‘lower for longer’ strategy]

Jack Campbell is the editor of Broker Daily. After graduating from the University of Wollongong in 2022, Jack began his journalistic career working on Broker Daily’s sister brand, HR Leader. In August 2023 he was made the news editor and worked alongside some talented journalists writing articles and recording podcasts.

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