Australian Economic Comment: RBA hold, as expected. UBS still see +25bps hike in Aug. But now see rate cuts from Nov-27

Research evidence excerpt

Australian Economic Comment: RBA hold, as expected. UBS still see +25bps hike in Aug. But now see rate cuts from Nov-27

say it's material," but 'higher than forecast' & 'probably means a little bit of an upward

revision to our wage forecasts'. Meanwhile, Bullock was asked if budget tax changes

could slow housing & help get inflation down; but said "it is still too early to say."

Bullock: 'growth has to slow, & unemployment rise, to get inflation down'

Bullock was definitive the economy has to slow, & unemployment rise further, to get

inflation down. Bullock reiterated "Growth has to slow... We have excess demand...

That's what has to happen to get inflation down." Indeed, Bullock later added 'bringing

excess demand down is part of reducing the ability of businesses to pass on costs'.

Bullock: pushes back again dovish market reaction to recent data

Bullock pushed back again the market reaction to recent data, which lowered the

pricing for the RBA cash rate in coming meetings. Specifically, Bullock noted 'market

pricing (of fewer rate hikes) reacted to monthly numbers of lower headline CPI and

unemployment up to 4.5%. But there is volatility. I wouldn’t jump on those numbers...

Underlying inflation was in line with our expectations.' Bullock added 'other labour

market indicators improved a little bit... We think the labour market is a bit tight.'

UBS still expect RBA to hike the cash rate by 25bps in Aug-26, to 4.60%

Overall, UBS still expect the RBA to hike the cash rate 25bps, to 4.60%, in Aug-26. A key

driver of our view remains inflation is too high, & the labour market remains tighter than

full employment. For the RBA's forecast revisions in their Aug-26 SOMP, headline CPI is

tracking below their forecast. However, their headline CPI forecast for Q4-26 is only