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Inflation data pushes rate cut to top of to-do list for RBA in February
The RBA could cut the cash rate at its next meeting in February on the back of this week’s quarterly CPI results, according to Canstar.
30 Jan 2025
The RBA could cut the cash rate at its next meeting in February on the back of this week’s quarterly CPI results, according to Canstar.
The RBA could cut the cash rate at its next meeting in February on the back of this week’s quarterly CPI results, according to Canstar.
The ABS December quarter CPI data recorded headline inflation at an annual rate of 2.4%, down from 2.8% in the previous quarter, however, this was in part driven by the state and federal governments’ temporary electricity subsidies.
Importantly, trimmed mean inflation, which is the RBA’s preferred measure, as it reduces the effect of irregular or temporary price changes, dropped from an annual rate of 3.6% in the September quarter to 3.2% – just above the RBA’s target band.
Trimmed mean inflation is now at the lowest annual rate since December 2021, and well below the recent peak of 6.8% at the end of 2022, according to the ABS.
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| ABS Quarterly CPI – annual movement | ||
| Quarter | Quarterly CPI | Annual Trimmed mean |
| Dec-22 – recent peak |
7.80% | 6.80% |
| Mar-23 | 7.00% | 6.50% |
| Jun-23 | 6.00% | 5.80% |
| Sep-23 | 5.40% | 5.10% |
| Dec-23 | 4.10% | 4.20% |
| Mar-24 | 3.60% | 4.00% |
| Jun-24 | 3.80% | 4.00% |
| Sep-24 | 2.80% | 3.60% |
| Dec-24 | 2.40% | 3.20% |
Source: ABS Consumer Price Index, Australia, Quarterly CPI and Monthly CPI indicator, annual change (%).
Westpac and NAB bring forward timing of first cash rate cut
Following the release of the latest CPI data, economic teams at the big four banks are now in agreement that we are likely to see a cash rate cut in February.
On Wednesday, economists at Westpac updated the bank’s cash rate forecast, bringing forward its first projected cash rate cut from May to February 2025. On Thursday, economists at NAB also brought their forecast forward from May to February.
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| Current big four bank cash rate forecasts | |
| Bank | No. cuts in cycle |
| CBA | 4 – starting Feb |
| Westpac | 4 – starting Feb |
| NAB | 5 – starting Feb |
| ANZ | 2 – starting Feb |
Source: www.canstar.com.au – 30/01/2025.
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This article was reviewed by our Content Editor Alasdair Duncan before it was updated, as part of our fact-checking process.
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