Bevan Graham’s Post

Australian June quarter inflation came in softer than expected. The important trimmed mean annual rate came in at 3.9% vs market expectations of 4.0%. While lower than the market expectations the result is higher than RBA forecasts and shows only limited progress on disinflation in the last six months. That said, its not a bad enough miss to force a reluctant RBA to resume interest rate hikes next week. Expect a “no change” on Tuesday.

Inflation has surged to a six-month high of 4% in May, up from 3.6% in April, according to the Australian Bureau of Statistics. This increase in inflation is prompting concerns of a potential interest rate rise in August. As price pressures remain strong, economists and investors alike are bracing for further economic adjustments. #Economy #Inflation #InterestRates #Finance #Investing #Australia Read more: https://lnkd.in/gRkXzhbf

RBA DONT GET DISTRACTED BY THE NOISE - RBA keeps rates on hold at 4.35 per cent - Inflation remains delicately poised The RBA elected to keep rates on hold today, citing persistent inflation and an uncertain economic outlook. Any anxiety around this month’s decision was largely resolved last week, with underlying inflation fell slightly, its sixth consecutive quarterly decrease. The RBA still does not expect inflation to return to within its target range until late 2025. Although the RBA forecast was made on the 31st of July allot has changed in the past 6 days. Forecasting in the current environment though is difficult, and uncertainty was definitely the word of the day in the RBA’s announcement. -          In Australia Low GDP growth amidst a tight labour market, wages growth without productivity, excess demand but struggling businesses, -          Internationally evolving global financial market volatility. With rate cuts expected in the US at the next meeting if not sooner. We now wait and watch the US and global moves and see if the RBA follows the US lead or on Sept 24 the RBA stays focused on domestic factors, with second quarter GDP results released at the start of September.

Inflation in Australia following similar trends to elsewhere, if a little lagged. Headline inflation was a bit lower than expected at just 0.2 per cent for the September 2024 quarter, taking the annual figure down to 2.8 per cent, according to the latest ABS figures. That's the lowest annual figure figure since March 2021, with further declines to come. There was a bit of inflation on alcohol and tobacco, but not a whole lot else. As expected, electricity subsidies helped to reduce the headline figure. The trimmed mean result for the quarter was 0.78 per cent, taking the annual reading down from 4 per cent to 3½ per cent, essentially in line with the Reserve Bank's forecasts. (ABS stats) #ausbiz

The RBA kept the cash rate at 4.35%, saying that while overall inflation is easing, some prices are still rising more than expected. Growth remains weak, with continued pressure on household consumption. The Board reiterated its focus on guiding inflation back to target, with a close watch on economic data to inform future decisions. #RBAUpdate #CashRate #AustralianEconomy #Inflation

The Australian All-Ords index rose 8.3% during the financial year ending last Sunday. But Australia’s economy has had a dismal time with real GDP per capita contracting in each of the five quarters to March 2024. With annual CPI inflation rebounding after earlier falls, the market now expects the RBA to further dampen consumer spending by increasing its cash rate from 4.35% to 4.6% in either August or September. By: Percy Allan https://lnkd.in/giE4frT2

Inflation Falls to 2.7% – Is the Tide Turning? Big news for the Australian economy! 📉 The latest data from the Australian Bureau of Statistics shows inflation dropped to 2.7% in August, a sharp decline from July's 3.5%. It's the first time since 2021 that inflation has landed within the RBA's target of 2-3%. 🙌 But it’s not time to celebrate just yet. The more accurate quarterly indicator showed 3.8% inflation in the June quarter, and we won’t get the September figure for another five weeks. Until inflation consistently stays in the 2-3% range, the RBA is unlikely to ease interest rates. This drop is definitely a positive sign and could bring us one step closer to more favourable borrowing conditions. #realestate #homeloans #property

May 2024 Curve Insights - RBA Sets the Bar High Despite the cash rate remaining unchanged, the statement that followed acknowledged that inflation continues to remain high and is easing at a rate slower than expected. Governor Bullock stressed that the current rate was appropriate but expressed caution regarding the potentially bumpy road ahead. The RBA has nominated ‘higher for longer’ as the path back to the desired inflation target band of 2-3%. Whilst demand in Australia has cooled considerably, strong population growth has seen aggregate demand persist and labour market tightness continue. Going forward, a cooling in the labour market and/or significant uptick in productivity will be a crucial component to ensuring sticky inflation returns to the RBA’s bracket by December 2025. Click below to read the full March Curve insights https://lnkd.in/eegDSgTp #RBA #inflation

I’ve never been a fan of any last-minute change to a GDP forecast based on partial indicators, but it often appears necessary. Today, the updates for 2024Q1 include: an increase in inventories of 1.3%; a decline in Gross Operating Profits of 2.5%; and a $5.41bn decline in Australia’s balance of trade. The market was at 1.1% to 1.2% annual growth, depending on the survey. Forecasts are likely being marked down by some. The Aussie dollar has fallen. I’ll stick with my 0.9% forecast from mid-March while recognising there may be more noise to tomorrow’s GDP update than first appears. Whatever the number it will reveal a weak real economy, confirming the RBA’s dilemma as the Bank remains concerned about stubborn inflation. #ausbiz #economics #hia

Our latest report highlights GDP growth forecasts, resilient retail and labor data, and the RBA’s cautious stance on rate cuts. Explore the challenges ahead for sustaining growth in 2025." An interesting report, worth a read.