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

• The RBA held the cash rate at 4.35% amid ongoing but moderating inflation, particularly in the services sector, reflecting a cautious approach to ensure inflation returns to the 2-3% target range by the second half of 2025.
• Economic uncertainties, including persistent services inflation, global geopolitical risks, and the effects of previous rate hikes on consumption and economic growth, continue to influence the RBA’s policy decisions.
• The RBA maintains a flexible policy outlook, indicating that future rate adjustments will be data-driven and contingent upon evolving economic conditions and inflation trajectories, with a strong commitment to achieving its inflation target.

Australia CPI Inflation 3.6% y-o-y (consensus 3.4%) in Q1-24

- Australia's CPI inflation rate dropped by 0.5 percentage points to 3.6% y-o-y in Q1-24, but that still exceeded consensus expectations of 3.4%.
- The upside news was in underlying pressures as the weighted median held at 4.4%, and the trimmed mean disappointed by only slowing 0.2pp to 4%.

Australia Unemployment Rate 3.84% (consensus 3.9%) in Mar-24

- Australia's unemployment rate in Mar-24 increased by marginally less than the consensus forecast, indicating relative stability in the labour market.
- However, the 3.84% rate remains higher than the one-year and long-run averages, and employment decreased, signalling weaker demand.

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

• The RBA's decision to maintain the policy rate at 4.35% reflects moderating headline inflation but ongoing high services inflation, complicating the balance between controlling price levels and supporting economic growth.
• Economic uncertainties, including the sustainability of productivity growth, global inflation trends, and geopolitical risks, are critical in shaping the RBA's forward-looking monetary policy stance.
• The RBA emphasizes its commitment to returning inflation to its target range. Future policy decisions will be highly data-driven, taking into account the evolving landscape of domestic demand, labour market conditions, and global economic trends.