Australia’s economic landscape is showing signs of cooling inflation, prompting speculation about a potential interest rate cut by the Reserve Bank of Australia (RBA). According to KPMG chief economist Brendan Rynne, core inflation is trending at 2.7 per cent annually in the June quarter. This figure is seen as a green light for the RBA to consider lowering the cash rate at its upcoming meeting in August.
Dr. Rynne stated that the headline inflation decrease from 2.4 per cent to 2.2 per cent should reassure the RBA that inflation is progressing towards the sustainable target of 2.5 per cent. This development strengthens the case for easing monetary policy, which has been a topic of keen interest among economists and market analysts.
“Since the RBA’s last board meeting, it seems the arguments for lowering the cash rate have now materialised more than the arguments put forward to maintain the more restrictive monetary policy settings,” Rynne added, highlighting a shift in the economic indicators influencing monetary policy decisions. Persistent low consumer and business confidence further underscore the need for potential rate relief.
With households and investors closely monitoring these developments, the prospect of a rate cut could stimulate economic activity. The RBA’s decision in August will be pivotal in shaping the near-term financial outlook, as stakeholders await further measures to bolster spending and investment.
