Economists say interest rate pause likely for about a year as ABS releases weaker-than-expected economic data
Financial markets are overwhelmingly confident the Reserve Bank governor, Philip Lowe, will use his final board meeting to leave the cash rate unchanged for a third month at 4.1%.
Nab’s view that the RBA has one more rate rise to come hinges on expectations “the flow of data over the third quarter will be enough to see them act on their modest tightening bias”, said Taylor Nugent, an economist with the bank’s markets division. “While we were looking for a sharp drop in profits, the 13.1% fall surprised even us,” said Adam Boyton, the head of Australian Economics. Mining profits sank 2.13% compared with the March quarter, while non-mining firms reported a 5% profit drop.
Private inventories fell 1.9% in the quarter alone, compared with a market consensus of a 0.4% increase. Nab’s Nugent estimated that result alone will shave a full percentage point from quarterly GDP growth, or more than triple the 0.3 percentage point previously expected.
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