RBA Holds Rates, Eyes Economic Forecasts for Next Move
The Reserve Bank of Australia (RBA) is widely expected to keep interest rates unchanged at its meeting today, but markets will be closely watching the accompanying forecasts and communication for hints about future policy.
The RBA's decision itself carries little market-moving potential, with a hold being priced in almost unanimously by economists. However, the Statement on Monetary Policy and the Governor's press conference are expected to provide valuable insights into the Bank's thinking.
Since May, economic conditions have shifted in several directions. Oil prices have eased somewhat, which is positive for the inflation outlook. Unemployment has come in higher than forecast at 4.4% in two of the three months of the June quarter against a prior forecast of 4.2%. Trimmed mean inflation for the quarter came in a touch softer than anticipated at 0.8%, but still above target.
Major bank economists believe rates have now peaked, with possible cuts possible from around mid-2027. However, a sizeable group of economists continues to argue further tightening will be required due to persistently low unemployment and sticky services inflation.