ANZ Weekly: RBA will start cutting rates in February

With Australia's underlying inflation surprising materially to the downside in Q4, we've brought forward our forecast for the RBA's first rate cut from May to February. The data clearly show that disinflation has become more broad-based, even once we strip out the impact of wide-ranging government subsidies. That said, with the labour market still very tight and services inflation uncomfortably high, the RBA is unlikely to become complacent about inflation risks. Accordingly, we still expect the Bank to cut rates by just 75bp across its easing cycle.