TD Securities expects the RBA to keep rates steady next week, citing soft economic data and inflation risks delaying cuts.
The Reserve Bank of Australia is expected to hold its cash rate at 4.35% at next week’s meeting, as recent weak economic data and Federal Budget tax changes reduce pressure for hikes. TD Securities analysts argue that while trimmed mean inflation remains elevated, the closing output gap and rising unemployment risks suggest prolonged policy restraint.
Market expectations for an August rate hike have waned, though the May CPI print due June 24 will be critical in determining the RBA’s next move. Capacity utilization trends indicate a narrowing output gap, which could further dampen inflationary pressures but also signal economic softening.
Analysts note that the RBA’s messaging may lean dovish, reinforcing a prolonged hold rather than signaling imminent cuts or hikes. The central bank’s models do not currently point to a recession, but inflation persistence remains a key concern.