Bank economist gives his verdict on next week's interest-rate decision
The Reserve Bank of Australia (RBA) is widely expected to cut interest rates at its July 8 policy meeting, as easing inflation and subdued consumer spending reinforce the case for monetary policy support.
Bendigo Bank chief economist David Robertson (pictured) said the central bank is “very likely” to lower the official cash rate to 3.6%, following a sharper-than-expected decline in consumer prices.
“Australia’s CPI fell to 2.1% in the May monthly indicator, and even core measures such as the trimmed mean fell to below the 2.5% target, their lowest level since 2021,” Robertson said. “So, inflation appears back under control.”
He also pointed to weak retail activity and stabilising price pressures as key reasons the central bank may begin easing.
The bank economist’s forecast aligns with the broader market view that the RBA is nearing a turning point in its policy stance. Earlier this week, ANZ joined other major banks in predicting a 25-basis-point rate cut.
Looking ahead, Robertson sees a further cut in November — possibly to 3.35% — if second-quarter inflation data, due later this month, supports the move.
“The next rate cut after July (to 3.35%) may not be until November, but the path back to more neutral rates does appear on track,” he said.
However, he also cautioned that robust employment levels may limit the scope for further easing.
“One of the reasons we probably won’t go below a neutral cash rate of around 3.1% is resilient labour markets, with unemployment at 4.1% still much lower today than pre-pandemic back in 2019, and its average rate through that decade of 5.5%, and similarly record lows for underemployment,” Robertson said.
While some softening in jobs growth is expected, he noted Australia’s labour market remains stronger than that of many other developed nations.
Want to be regularly updated with mortgage news and features? Get exclusive interviews, breaking news, and industry events in your inbox – subscribe to our FREE daily newsletter. You can also follow us on Facebook, X (formerly Twitter), and LinkedIn.
