Financial markets continued to scale back their expectations for rate cuts by the RBA following the release of Q3 CPI data this week. As a result, they are now fully pricing in a rate cut only in May of next year. However, we believe there is still a compelling case for the Bank to start loosening policy as early as February. After all, underlying inflation is clearly losing momentum. And with the output gap set to keep narrowing, on the back of subdued growth in activity, the disinflation process should continue unimpeded.
Subscriber content
Read this in full, free
Start a free trial and use one of your 10 free starter credits to unlock this piece.