Interest rates on hold until 2025

2 weeks ago 2

Rates on hold

The Reserve Bank released its monetary policy decision, with the cash rate target on hold as expected at 4.35 per cent.

Markets were little moved by the news and the release.

The bank's latest statement on monetary policy showed GDP forecasts revised down slightly.

Shane Oliver from AMP prepared a neat 'before and after' chart to underscore these changes.

Source: Shane Oliver, AMP

The forecasts for trimmed mean were also revised back down a little, after the 'mini-scare' for inflation in May 2024.

Source: Shane Oliver, AMP

There is a possibility that headline inflation 'pops' higher to back above target above next year if government subsidies are wound back, but I'd say it's pretty unlikely that the subsidies are going anywhere.

Overall, it looks most likely that if the trimmed mean inflation figure comes in at +0.7 per cent for the December quarter when it's reported in January, then interest rates will be on the way down from February 2025.

A bit can happen between now and then, of course.

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