UNSW Business School
Professor Peter Swan, School of Banking and Finance, UNSW Business School, is available for comment. He can be reached at peter.swan@unsw.edu.au or by phone at +61 2 9065 5103. Peter says, “While the RBA could raise the rate, they will most likely leave it on hold. Inflation is still well above the RBA threshold. I am very surprised if they reduce the rate even with about zero GNP growth and very negative per capita growth. Thanks to net zero, power prices will continue to ratchet up quickly, with more blackouts and brownouts looming. An extra half million migrants will ensure that rents continue to rise.”
Dr Nalini Prasad, Senior Lecturer, School of Economics, UNSW Business School, is available for
comment. She can be reached at nalini.prasad@unsw.edu.au. Nalini says, “The RBA will hold interest rates steady this Tuesday. Inflation has been trending down over the past year but still remains above the RBA’s target band. I think this gives the RBA an opportunity to wait to see what happens. Especially in the face of a labour market that is still strong.”
Associate Professor Evgenia Dechter, School of Economics, UNSW Business School, is available for comment. She can be reached at e.dechter@unsw.edu.au. Evgenia says, “It is unlikely that the RBA will make a cash rate move in the upcoming meeting. Recent indicators point to a significant downturn in economic activity, with recent inflation measures also indicating a decline. For instance, the latest GDP data shows an annual growth of 1.5%, consistent with the RBA forecast, while the unemployment rate shows an increasing trend, and its last measure stands at 4.1%, exceeding the RBA forecast. Moreover, GDP per capita has continued its decline for the third consecutive quarter, suggesting a per capita recession.
Despite the recent data readings that indicate a downturn, there remains significant uncertainty surrounding wage growth, the trajectory of services price inflation, and international developments. Given the RBA's cautious approach, it is more likely that they will choose to wait for a few more months to confirm the downturn before considering lowering the cash rate.”
Dr Gonzalo Hernandez, School of Economics, UNSW Business School, is available for comment. He can be reached at g.castexhernandez@unsw.edu.au. Gonzalo says, “The CPI indicators have been showing a consistent downward trend since the peak in December 2022. However, quarterly and monthly indicators still reflect figures above the inflation target. The implementation of contractionary monetary policy is contributing to a slowdown in aggregate demand, mitigating the upward pressure on prices. Overall, we are witnessing a contraction in economic activity, marked by slow GDP growth, declining GDP per capita, and a rise in unemployment. Although the unemployment rate has increased to 4.1 per cent from the low of 3.4 per cent last year, it is still likely to remain below the natural level.
Given that inflation measures are still above the target and the unemployment rate is below historical levels, the necessary conditions for a normalisation of the cash rate are not yet in place. It is, therefore, unlikely for the RBA to decrease the cash rate this month. If the current trends persist in the coming months, the RBA may consider implementing cash rate normalisation measures.”
Associate Professor Konark Saxena, School of Banking and Finance, UNSW Business School, is
available for comment. He can be reached at k.saxena@unsw.edu.au.
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