Commonwealth Bank of Australia rgue that the RBA’s latest household consumption forecasts, updated in August, “look too rosy”.
CBA point to the 1.1% rebound in household consumption the RBA is projecting, and argue:
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This represents a significant increase compared to the 0.3% growth seen in the first half of the year.
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Such a sharp rise in spending growth hasn’t been reflected in CBA’s internal data up until late September.
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It also doesn’t align with the current cautious spending patterns, given the ongoing low consumer confidence.
CBA conclude:
- We expect the RBA will need to downwardly revise their consumption forecasts in November.
- Indeed, the RBA this week already noted that there are downside risks to this forecast
- Such a shift, alongside an expected further lift in unemployment and trimmed mean inflation in line with our forecasts, would set up the RBA to deliver rate relief before year-end
CBA is forecasting a 25bp rate cut at the RBA 9 – 10 December meeting.
We had the most recent RBA meeting this week, the first line in that pic above, with two more coming this year then 3 in H1 of 2025.
This article was written by Eamonn Sheridan at www.forexlive.com. Source