Westpac’s chief economist, Luci Ellis, has indicated that the higher-than-expected September quarterly inflation figures will likely cause the Reserve Bank of Australia to hold interest rates steady in the upcoming meeting. This decision delays the prospect of rate reductions, potentially pushing them further into next year, or even 2025. Westpac is one of Australia’s largest banking and financial services institutions, providing a broad range of services to personal, commercial, and institutional customers. The bank also has international operations, primarily in New Zealand.
Ellis highlighted that the unexpected surge in inflation, coupled with signs of a nascent recovery in consumer spending, diminishes the likelihood of a rate cut occurring as early as December. The resilience of domestic demand is also factoring into the revised outlook, presenting a more complex economic landscape for policymakers to navigate.
In a recent report, Ellis stated that even a rate cut in February is now considerably uncertain, given the magnitude of the upside surprise in the latest inflation data. This reflects a growing concern that inflationary pressures may be more persistent than initially anticipated, requiring a more cautious approach from the Reserve Bank.
Westpac is undertaking a comprehensive reassessment of its cash rate outlook in light of both the recent inflation outcome and the evolving picture of domestic demand. This reassessment will inform future predictions regarding monetary policy and the timing of potential interest rate adjustments.