TD Securities forecasts a final 25 bps hike as Q1 GDP aligns with RBA projections but weak household spending persists.
Australia’s Q1 GDP grew 0.3% quarter-on-quarter, matching the Reserve Bank of Australia’s forecast, but weak household and government spending offset gains from data center investment. Private investment contributed 0.69 percentage points to the 0.95% rise in private demand, the largest since Q1 2021.
Household consumption remained flat when adjusted for the end of a government electricity rebate, while productivity fell 0.6% quarter-on-quarter. The RBA’s implied forecast was met, but underlying demand concerns persist, with economic activity supported primarily by temporary factors.
TD Securities strategists expect one final 25 bps rate hike in August, citing above-trend growth and persistent inflation pressures despite softening demand.