While higher prices are forecast to ease, economists warn that should inflation reignite, the Reserve Bank will stand pat on rate cuts at least for this year.
Already a subscriber?Pricing pressures in Australia are expected to ease this year as the economy slows and unemployment inevitably climbs, keeping the Reserve Bank on track to cut interest rates in the next 12 months.
“For the RBA, any easing will only come after they are confident inflation will return to the middle of the target by around mid-2026.” though a sizable minority of respondents say 2025 is more realistic, given the stickiness of inflationDan Fabbro at Macquarie Bank said while he expected price pressures to cool, a global economic recovery, Australian tax cuts and house price inflation could delay the RBA.IFM Investors’ Alex Joiner added that policymakers would not allow a re-acceleration of inflation in Australia.
“Policymakers may be forced to keep the pressure on demand-driven inflation until the supply influences start to ease back,” he added.Jo Masters at Barrenjoey said that did not mean the RBA would lift the cash rate again – “the more likely scenario would be rate cuts pushed back”.Advertisement “If US inflation re-accelerates in the aftermath of Fed easing mid-year, that would certainly prompt central banks who haven’t eased by then – including the RBA – to reconsider their plans.”
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