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RBA Cash Rate 4.35% (consensus 4.35%) in Aug-24

• The RBA maintained its policy rate at 4.35% amid persistent inflationary pressures, aligning with the economic consensus and highlighting the challenges in achieving its inflation target promptly.
• Future policy decisions will hinge on domestic consumption trends, labour market conditions, and global economic uncertainties, with the RBA emphasizing a data-driven approach to sustainably ensure inflation returns to the target range.
• The RBA remains vigilant to upside inflation risks, prioritizing inflation targeting within its mandate, and is prepared to adjust policy settings based on evolving economic data and risk assessments.

Australia RBA Cash Rate Target 4.35% (consensus 4.35%) in Jun-24

• The RBA held the cash rate at 4.35%, reflecting a cautious approach in response to persistent inflation and excess demand pressures, aligning with the economic consensus.
• Domestic consumption trends, labour market conditions, and global economic uncertainties will influence future policy decisions, focusing on achieving the 2-3% inflation target by the second half of 2025.
• The RBA emphasizes data-driven decision-making and remains vigilant to upside inflation risks, maintaining flexibility in its policy stance to ensure inflation returns to target sustainably.

Australia Unemployment Rate 4.0% (consensus 4.0%) in May-24

- Australia's unemployment rate dipped to 4.0% in May 2024, reversing a third of April's rise, with employment increasing by 39,700 jobs, indicative of ongoing labour market resilience.
- Economic indicators reveal a dichotomy in recovery, with robust service sector performance (PMI Services 52.5) counterbalanced by manufacturing sector vulnerabilities (PMI Manufacturing 49.7) and tepid consumer spending growth (retail sales 0.1% m-o-m in April 2024).

Peak PMI Pace Probably Passing

• The PMIs probably peaked in the spring, with the US’s jump beyond its peers in May setting it up for a more substantial drop during the summer.
• Residual seasonality from the pandemic-corrupted adjustment factors will likely exaggerate the US payback as part of a softening global story.
• A summer downturn should support the re-emergence of dovish debate in the US, where we still expect a September cut. However, global policy only looks a little tight.

By Philip Rush