RBA will wait until early-2025 to cut rates

We expect the Reserve Bank of Australia to leave rates unchanged at its meeting next week. Although underlying inflation remains uncomfortably high, it is unlikely to meet the threshold for a resumption of policy tightening. We suspect that the Bank will be content to wait for below-trend growth and labour market softness to dampen capacity pressures. That said, the path back to the RBA’s 2-3% inflation target is likely to be bumpy and we don’t expect rate cuts to come on the agenda before early next year.