The Reserve Bank (RBA) Board left the cash rate unchanged for the third consecutive month at 4.10%.
While there were only a small number of changes to the RBA’s policy statement, the changes were telling – they show the RBA is now more confident we are on that path to a soft economic landing.
The June quarter National Accounts confirmed the economy is slowing. While the headline numbers were reasonable, looking underneath the hood points to underlying weakness.
The economy grew at 2.1% in annual terms while population growth was a very strong 2.4%. This means that GDP per capita went backwards. Indeed, this occurred for the second consecutive quarter which means Australia has officially entered a per capita recession.
So, what does all this mean for the RBA? We expect the next move in the cycle to be down, in the second half of next year, when it becomes clear the economy needs policy support.
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The Reserve Bank puts its faith in the immaculate disinflation
Disinflationary pulse gathering momentum
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