Deposit holders rejoice, and mortgage holders groan, as Australia's third-largest bank and its team of economists have pushed back the timeline of the first RBA rate cut by six months.
Previously, the eggheads at NAB forecast a November 2024 rate cut; now, they don't expect this to happen until May 2025.
This is a strong indicator from the bank, given CBA and Westpac are still pinning their tail on the November donkey, while ANZ's economists only recently moved their forecast to February 2025.
This change in expectation from the NAB economics team came fresh after monthly CPI data delivered an upside surprise, soaring 4.0% in the 12 months to May, up from the previous month’s 3.6% and well above market expectations of a 3.8% rise.
Alan Oster, NAB Group Chief Economist. Source: NAB
"The mix of slow growth and gradual progress on inflation reflects the RBA’s decision to embrace a 'lower for longer' approach – a lower rate peak compared to other advanced economies, resulting in a longer period at that peak," NAB economists noted.
"It is possible the [RBA] Board will change course and raise rates at its August meeting (especially if the Q2 print exceeds expectations) but with the labour market easing we don’t believe their hand will be forced."
That "Q2 print" means inflation data for the June 2024 quarter, which won't be released until late July.
It is generally a more reliable indicator than the monthly release given it contains a bigger basket of goods measured.
The next RBA monetary policy meeting subsequent to that release will be held over 5 and 6 August.
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