Bendigo Bank's October Economic Update
With Australians breathing a little easier following the RBA's decision to hold rates on Tuesday for the fourth consecutive month, expectations for a rate hike next month have firmed.
Bendigo Bank’s Chief Economist, David Robertson today released his October Economic Update, revealing rate watchers may not have to wait too much longer for another rise as anticipation grows that rates will stay higher for longer.
“Another hike to 4.35% as early as Melbourne Cup Day remains the expectation, as does our forecast we’ve shared throughout the year - that rate cuts will most likely be a 2025 story, not early to mid-2024,” Mr Robertson said.
“Inflation rates here and around the world are still expected to steadily moderate, but factors that will challenge the pace of normalisation in Australia include:
- The rebound in property prices, as supply fails to pick up versus population growth.
- Resilient jobs markets, as demand for labour remains persistent, and
- Higher energy prices, even with government subsidies and support.”
Mr Robertson said the next inflation data of note in Australia will be the third quarter numbers out on 25 October, which is likely to continue to show falling costs for goods, but not for services.
“Services inflation continues to be stubbornly high around the globe, and here tight labour markets, together with abysmal productivity is a major factor,” Mr Robertson said.
On fuel, a lower Aussie Dollar means a higher cost for oil imports, so unfortunately a higher price for petrol for us at the bowser.
“To achieve real wages growth and a lower unemployment rate, we need to lift productivity while also decreasing core inflation - which will all take time.
“The next move from the RBA is still more likely to be up than down, and the next read on inflation on 25 October will be critical, but markets are continuing to adjust to the ‘rates higher for longer’ scenario, and its implications,” Mr Robertson concluded.
