Investing.com– The Reserve Bank of Australia is no longer expected to hike interest rates in 2024 following some signs of easing inflation in the second quarter, Rabobank analysts said, although chances of a rate cut remained slim.
The central bank is set to meet next week, but is widely expected to at 4.35% after read mildly cooler than expected for the June quarter.
The second-quarter trimmed mean CPI data was in line with the RBA’s forecast, and a fall in non-tradables and services inflation presented a greater chance that the central bank will keep rates steady, Benjamin Picton, Senior Strategist at Rabobank said in a social media post.
Services inflation in particular was a key point of concern for the RBA, with the central bank having signaled earlier that services still presented upside risks for price pressures.
While the second-quarter CPI reading did show an uptick in some inflation- particularly from imports and steady consumer spending, it was unlikely that the RBA will have enough impetus to hike rates further.
Still, the central bank is also unlikely to cut interest rates anytime soon, considering that inflation still remains comfortably above the RBA’s 2% to 3% annual target.
Rabobank only expects the RBA to begin cutting rates from the second quarter of 2025.