Mortgage-holders may have to wait longer for more interest rate relief after a hawkish turn from the Reserve Bank prompted analysts to push back their expectations for when the central bank will next cut rates.
The RBA left the cash rate on hold at 3.6 per cent on Tuesday, in a move widely anticipated by economists and bonds traders.
But accompanying commentary from the bank’s board and governor Michele Bullock was more pessimistic about inflation than expected.
After previously anticipating the next cut to come in November, Commonwealth Bank economists pushed back their forecast until February.
The RBA board was concerned that, following strong economic activity and consumer price index figures in the lead-up to the meeting, inflation was now set to overshoot their latest forecasts.
CBA similarly upgraded its forecast for trimmed mean inflation, the RBA’s preferred measure, to 0.8 per cent in the September quarter.
“With a lift in trimmed mean inflation for the quarter and better activity data, led by the consumer and a still resilient labour market, we feel there are enough reasons to see the RBA remain on hold in the two remaining meetings in 2025,” CBA head of Australian economics Belinda Allen said.
JP Morgan’s Ben Jarman also retracted his call for a November cut, while the money market lowered its chance from more than half to about a third.
HSBC chief economist Paul Bloxham also thought the RBA was on the hawkish side, but stuck with his prediction for a move lower in November.
“For some time now, we have suggested that while our central case is for two more cuts (in November and February), there is a clear risk of fewer cuts,” he said.
“Whether we get a further cut this year will critically hinge on the Q3 CPI print, due on 29 October, being low enough.”
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