While the annual Consumer Price Index (CPI) rose by 2.1% in October, within the RBA’s target range, core measures of inflation, such as the trimmed mean, increased to 3.5%, indicating underlying price pressures remain.
Real Estate Institute of Australia President Leanne Pilkington highlighted the mixed signals, saying, “The annual movement for the monthly CPI excluding volatile items is the lowest since November 2021, but the trimmed mean inflation shows more work is needed to cool underlying pressures.”
She emphasised the importance of a slowing economy, with six consecutive quarters of declining per capita GDP and job market challenges, as reasons for the RBA to consider rate cuts soon.
“The RBA will need to act on interest rates given the inherent lags in the system,” she concluded.
Despite this, Canstar Data Insights Director Sally Tindall noted that the RBA minutes from November reaffirm that the Board requires sustained evidence of declining inflation before easing monetary policy.
“The RBA has said it needs more than one good quarterly inflation outcome before cutting rates. May 2025 could be the earliest possibility if data behaves.”
David Robertson, Bendigo Bank’s Chief Economist, agreed saying that underlying inflation at 3.5% shows more progress is needed.
“Markets now align with our view of rate cuts beginning in May 2025.”
He noted factors like household income recovery and New Zealand’s recent 50-basis-point cut as indicators of what might follow for Australia.
The RBA will next meet on December 10, with markets closely watching January’s quarterly inflation data for clearer signals on the timing of potential rate cuts.
For mortgage holders, the advice remains to plan conservatively.
“Don’t start baking a rate cut into your budget until it hits your bank account,” Ms Tindall cautioned.
