For the first time in a long time, Australia's inflation story is starting to look more like a landing than a fight.

The latest Consumer Price Index figures from the Australian Bureau of Statistics showed annual inflation eased to four per cent in May, down from 4.2 per cent in April. On the surface, that might not seem like a major move. Inflation remains above the Reserve Bank's target range and some categories continue to record stubborn price growth.

But the significance of this result lies less in where inflation sits today and more in what it means for where interest rates are likely heading next.

The biggest takeaway is that inflation continues to move in the right direction.

Markets had been bracing for another sticky result after a period where progress appeared to stall. Instead, headline inflation came in softer than expected, helped by falling fuel prices and easing transport costs. Annual transport inflation halved from 6.6 per cent in April to 3.3 per cent in May, while automotive fuel prices fell 11.9 per cent during the month following lower oil prices and the impact of reduced fuel excise measures.

While petrol prices don't solve Australia's affordability challenges, they are one of the most visible and immediate costs for consumers. Falling fuel costs feed through the economy quickly, helping ease pressure on household budgets and business operating expenses.

The ABS data also showed headline inflation is now sitting at its lowest annual level in several months, reinforcing the broader trend that price growth is gradually moderating.

That trend is important because it aligns with what many economists and lenders have been saying for the last month.

Prior to this week's inflation data, ANZ, NAB and Commonwealth Bank had all shifted their forecasts, now believing the Reserve Bank had likely reached the peak of the interest rate cycle. Following the May inflation release, ANZ reaffirmed that view.

In its latest economic update, ANZ said it expects quarterly trimmed mean inflation to come in at 3.7 per cent for the June quarter, slightly below the Reserve Bank's forecast of 3.8 per cent. Importantly, the bank said that outcome, when combined with slowing economic activity, "supports our view that the cash rate has peaked".

The Reserve Bank has spent the better part of three years attempting to bring inflation under control through higher interest rates. If Australia's major banks are correct and rates have now peaked, the conversation shifts from how much higher rates could go to when they might begin coming down.

Westpac's caution comes from underlying inflation. The trimmed mean, the measure most closely watched by the Reserve Bank, increased from 3.4 per cent to 3.6 per cent annually. Housing inflation remains elevated at 6.5 per cent, reflecting ongoing increases in rents, electricity costs and new dwelling construction.

Electricity prices remain particularly problematic, rising 21.1 per cent over the past year following the removal of government rebates.

Housing construction costs are also showing signs of renewed pressure. ANZ noted new dwelling costs rose 0.9 per cent in May and are now running at an annualised pace of 8.6 per cent over the past three months. Builders continue to face higher labour, fuel and material costs, a reminder that inflationary pressures have not completely disappeared.

Housing affordability has deteriorated largely because of higher interest rates rather than higher property prices alone. Even modest reductions in mortgage rates would improve borrowing capacity, increase buyer confidence and reduce repayment pressure on existing homeowners.

While August is far from a certainty, the latest inflation result has strengthened the view that the next move in rates is more likely to be down than up. For borrowers, buyers and the development sector, that alone represents a significant shift from the conversation that dominated much of the past two years.

Joel Robinson

The inflation result the property market was waiting for

Commercial property group FiveX is doubling down on its move into the residential space.

The group, founded by Joshua and Marko Berger more than five decades ago, has followed up its plans for a 39-storey tower on North Sydney's Alfred Street with a proposed 61-storey tower in Chatswood.

The new tower at <a href="https://www.apartments.com.au/new-apartments/815-pacific-highway-chatswood-nsw-2067">815 Pacific Highway</a>, which would be one of the tallest proposed in Chatswood in recent years, will comprise 490 apartments, 76 of which will be dedicated affordable housing and managed by Evolve Housing for a minimum of 15 years.

The project will replace the long-standing Panorama Building, originally known as the BMA Tower, a 14-storey office building completed in 1972 and designed by Hungarian-born architect Hugo Stossel. At the time of its completion, the building was the tallest structure in Chatswood and became a local landmark due to its distinctive curved form and external glass lift.

<img alt="FiveX" data-entity-type="file" data-entity-uuid="956bd299-3864-47a0-8ea6-162b5524c5d8" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-06-24%20at%201.02.03%E2%80%AFPM.png?VersionId=EWx7teUr7RcYrI9mgRytwppwt5AdUDtb" />

fjcstudio is behind the designs. Its Architectural Design Report argues the ageing commercial building no longer reflects Chatswood's role as one of Sydney's key strategic centres and that the site is ideally positioned to support significantly higher residential density.

"The site is located at the heart of Chatswood, within the TOD accelerated rezoning area that supports higher density development around the new Metro station," the report states.

"The site's role within a walkable 400-metre radius catchment is where housing, employment, retail and community uses are encouraged to cluster in support of transit-oriented living."

<img alt="fjc" data-entity-type="file" data-entity-uuid="8d198f5e-cc71-4175-9357-be6ec7207473" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-06-24%20at%201.18.27%E2%80%AFPM.png?VersionId=5WUFc3IYBPvhQMBUYLCsjJhzdcVeYodE" />

The proposal has undergone two rounds of review by the NSW State Design Review Panel, with the design evolving through an extensive assessment process focused on design excellence, public realm outcomes, residential amenity and the integration of affordable housing.

fjcstudio says the residential component provides a diverse mix of apartment typologies, supporting a broad demographic and contributing to housing supply in a highly accessible location close to major transport, employment and retail infrastructure.

The application follows FiveX's plans for a 39-storey tower at <a href="https://www.apartments.com.au/new-apartments/275-alfred-street-north-north-sydney-nsw-2060">275 Alfred Street</a>, which it <a href="https://www.apartments.com.au/new-apartments/275-alfred-street-north-north-sydney-nsw-2060">submitted through the same NSW Government pathway</a> in December. That's for 184 apartments.

Recent activity in Chatswood includes Hyecorp launching its Archer Street project, Celine, and Develotek securing approval for a 34-storey tower.

First look: FiveX targets Chatswood skyline with 61-storey tower after North Sydney plans

Bridgewell Capital and SLD Development seem to be bullish on the Killara apartment market, filing plans for a second new development next to the Killara Golf Club.

The new plans are for 79 apartments across an amalgamated 4,989 sqm site on Buckingham Road.&nbsp;The project has been designed by BKA Architecture and is being assessed under the NSW Government's Low and Mid-Rise Housing and Infill Affordable Housing reforms. It is just 300 metres from&nbsp;Killara train station.

The majority of the apartments are three-bedrooms (46), with 23 two-bedroom apartments, seven one-beds, and three four-bedroom apartments. 17 of the apartments&nbsp;are proposed as affordable housing, representing 15 per cent of the project's gross floor area, allowing the development to access additional floor space and height incentives available under the NSW Housing SEPP.

There will be 131 resident and visitor car spaces, and more than&nbsp;1,450 sqm of communal open space. Landscaped areas would account for approximately 45 per cent of the site.

<img alt="Killara" data-entity-type="file" data-entity-uuid="75ef5ef7-a53b-4932-a8f1-38f63169eec9" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-06-24%20at%2011.04.00%E2%80%AFAM.png?VersionId=d_lG1A1StDaMQilljy25Fr8SF1BnAmKE" />

The site currently contains three detached dwellings and occupies a prominent position on the eastern side of Buckingham Road, with frontage to an area that has already begun transitioning towards higher-density housing. Existing apartment buildings of up to six storeys surround the site, while the Killara Golf Club forms its southern boundary.

The application has been lodged as a State Significant Development due to the affordable housing component and the scale of the project.

According to the design report, the proposal has been shaped by the area's evolving planning framework, which is encouraging greater housing density around transport infrastructure.

"The site sits along a growth area anticipated to undergo transformation in line with broader trends across New South Wales, driven by the implementation of the Low and Mid-Rise and Transport-Oriented Development State Housing Policies," the report states.

"Being within 800 metres walking distance to Killara Train Station, the project seeks to provide high-quality apartments designed for various family sizes, located in a vibrant landscaped setting."

The Upper North Shore suburb has become one of the most closely watched testing grounds for the NSW Government's housing reforms. A number of developers have moved quickly to consolidate sites around railway stations across suburbs including Killara, Lindfield, Gordon and Roseville, where the new planning settings are creating opportunities for apartment developments that would previously have been difficult to achieve.

The likes of Aqualand, Hyecorp, Holdmark and Vermont Property Group have projects in the region.

Bridgewell has several developments in the pipeline. Last September they submitted plans for <a href="https://www.apartments.com.au/news/nsw/bridgewell-capital-seeks-55-apartment-project-in-killara">55 new apartments</a> at&nbsp;23-25 Lorne Avenue in Killara, just the other side of Regimental Park from their new project. In May they filed for <a href="https://www.apartments.com.au/news/nsw/first-look-bridgewell-plots-120-apartments-and-childcare-centre-in-maroubra-town-centre">120 apartments in Maroubra</a>.

&nbsp;

&nbsp;

&nbsp;

First look: Bridgewell, SLD Development double down on Killara Golf Club

Sydney developer&nbsp;<a href="https://www.apartments.com.au/developers/central-element">Central Element</a>&nbsp;is doubling down in Drummoyne, lodging plans for a boutique apartment development on St Georges Crescent, only one-kilometre down the road from its first Drummoyne development, Bianca.

The new project at 15A-21 St Georges Crescent,&nbsp;a&nbsp;1,701sqm north-facing site overlooking Iron Cove, will have 45 apartmnts across 10 levels. Eight of the units will be dedicated to affordable housing.

The site sits within walking distance of Drummoyne Village, Birkenhead Point, ferry services and the Bay Run, and offers harbour views towards the Sydney Harbour Bridge and CBD skyline.

Designed by MHN Design Union, the development will deliver a mix of one, two and three-bedroom apartments, alongside resident amenity including a gym, landscaped communal open space and three levels of basement parking.

The project has been lodged under the NSW Government's Low and Mid-Rise Housing reforms, with Drummoyne Village identified as a town centre capable of accommodating additional housing supply.

Central Element acquired the site earlier this year as part of its continued expansion across Sydney's eastern suburbs, lower north shore and inner west.

The developer's current pipeline includes luxury apartment projects Pearl Bondi and a separate development on Lamrock Avenue in Bondi, a residential project in Barry Street, Neutral Bay, and a mixed-use seniors living community in Greenwich.

Central Element Managing Director Nathan Chivas said the project would address a shortage of new owner-occupier housing opportunities in Drummoyne.

"While we're seeing a significant shift across Canada Bay as major infrastructure investment, population growth and planning reform drive a new chapter for the region, in suburbs like Drummoyne there remains a genuine shortage of new boutique luxury housing opportunities for owner occupiers," Chivas said.

"Sites of this nature are increasingly difficult to secure, particularly those that combine a north-facing aspect with direct water outlook. Our St Georges Crescent project responds directly to the market demand, offering a level of exclusivity, outlook and lifestyle in the highly sought after suburb."

The development application has been lodged with the City of Canada Bay Council, with the project expected to launch to market in early 2027.

&nbsp;

Central Element seeks second Drummoyne apartment development

The NSW Government has unveiled plans that could deliver around 1,300 new homes across Nowra and Kiama, continuing its push to unlock housing in well-located regional centres along the South Coast.

The proposals, now on public exhibition, would pave the way for around 830 homes in Nowra and a further 450 homes in Kiama, while also introducing affordable housing requirements and increased building heights in key locations.

The larger of the two proposals is centred on Nowra, where the NSW Government is seeking to rezone land within the Mandalay and Riverfront precincts.

The Mandalay sub-precinct, located close to Shoalhaven Memorial Hospital, Nowra Library and the city's aquatic centre, could accommodate around 530 new homes. Around 30 per cent of housing delivered on Homes NSW-owned land would be dedicated to social and affordable housing, equating to roughly 100 homes. Building heights would increase from the current two-storey limit to between three and six storeys.

A separate rezoning proposal for the Nowra Riverfront Precinct would unlock a further 377 homes while creating stronger connections between the Shoalhaven River and the CBD. The plans include building heights ranging from five to 12 storeys, floor space ratios of up to 2:1 and a requirement for two per cent affordable housing.

Together, the two proposals would deliver more than 900 homes across the broader Nowra area, reinforcing the city's role as one of regional NSW's key growth centres.

The housing push builds on previous infrastructure commitments in the Shoalhaven, including government funding aimed at supporting thousands of future homes in West Nowra through upgrades to water and wastewater infrastructure.

Further north, the NSW Government is also progressing plans for the former Kiama Depot site, a two-hectare parcel near Kiama's town centre.

The rezoning proposal would transform the former industrial site into a residential community capable of delivering up to 450 homes. Buildings would range between six and eight storeys, with at least 10 per cent of homes allocated as affordable housing. The proposal also includes approximately 600 parking spaces and improved walking and cycling connections.

Planning Minister Paul Scully said the proposals are designed to increase housing supply in locations close to jobs, transport and services.

"For too long, families have struggled to find somewhere to live, and activating underutilised sites allows us to deliver the new homes these families need," Scully said.

"The Minns Labor Government is getting on with the job of unlocking well-located sites close to transport, jobs, and town centres and building the homes our communities need.

"These rezonings are about removing barriers to housing delivery and making sure land is put to better use so more people can find a place to call home within the communities they choose."

The latest rezonings form part of the Minns Government's broader strategy to accelerate housing delivery across NSW, particularly in established centres where existing infrastructure can support additional population growth.

Community consultation on the proposals is now underway, with feedback set to inform the final planning controls before the rezonings are determined.

Around 1,300 new homes earmarked for Nowra and Kiama as NSW Government pushes housing supply

Housing Risks

<html><body>Recent out-of-cycle rate hikes may be cushioned by subdued property prices with experts and economists predicting the downturn in Sydney and Melbourne to last 20 months on average, according to finder.com.au, the site that compares virtually everything.  In this month’s survey, experts and economists were asked to estimate how long the property downturn in Sydney and Melbourne will last, with the average prediction coming in at 20 months, or nearly two years. However, the downturn may last longer in Sydney with a slightly higher proportion of panellists believing the downturn will last 24 months or more in Sydney (9, 56%) compared to Melbourne (8, 50%). This pairs with greater positive sentiment for housing affordability with 43% of economists feeling positive about this metric, up from just 5% in March 2018 according to finder’s Economic Sentiment Tracker. <img src="https://lh6.googleusercontent.com/GGNPBSrOscmFBiMdZ0hkTADJdxrkDA8qdhUmnGl-jb2Q59PF0O3aWN7t6t2W3ATgkusIzAEj_jRjyffBE6ZoKNrO57Q01dia01Acx5ubBD1MDWaoFVMpqGVlQP2UOVV9a9mQUQQ" width="552" height="359" data-imagetype="External"> Graham Cooke, Insights Manager at finder.com.au, says falling property prices in some of the capital cities means the outlook for housing affordability has improved. “Only 4% of experts feel negatively about this metric, which represents a huge improvement since March this year. <img src="https://lh4.googleusercontent.com/FL-u8Gtfb1J1w5DfKhbrabHbpi-BaWFrWvsWBYkrv4gHsSuGxzXEhkZ54xJWN2LAQaDRXpxXmuFcXlTbWOwRzSttgq548UE2flgmk0IoVklVNXtcdYGTJUtpnTbhL-eFDJ8G_2s" width="553" height="385" data-imagetype="External"> “While the out-of-cycle rate movements aren’t promising for first home buyers, this may be offset by a cooling market as now could be the time for them to get in while prices are low. “For many would-be home buyers, a lower sales price represents a saving that could outweigh the costs of a higher interest rate, so first time buyers may experience some cushioning against rising rates,” he said. Ahead of the board meeting tomorrow (04/09/2018), all 30 members from the finder.com.au RBA survey share the view that the cash rate will be held for the 25th consecutive month.  Cooke said while it’s likely the Reserve Bank will hold the cash rate, this hasn’t stopped lenders from lifting rates independently.  “The belief that the cash rate won’t budge combined with increased funding pressure from overseas has spurred Westpac, Suncorp and other major banks to hike mortgage rates out-of-cycle.  “We expect this trend to continue, with the remaining of the big four and other lenders likely to follow suit in the coming days. “Mortgage holders should brace themselves for higher interest rates – it’s not a matter of if, but when.   “Switching to a new provider with a lower rate could pocket you thousands of dollars over the life of your loan, so don’t be afraid to refinance if you’re unsatisfied with your existing or updated interest rate,” he said.  To view out-of-cycle rate rises in August 2018, visit this page. Here’s what our experts had to say: Jordan Eliseo, ABC Bullion: "The RBA will hold interest rates at 1.50% at their next meeting, continuing a run of stability that now dates back over 2 years. Consumer confidence has been hit by the recent political chaos in Canberra, and job growth in the economy will likely slow down in the lead up to the next election, but the RBA is still reticent to cut, despite numerous headwinds the economy is facing." Tim Nelson, AGL Energy: "RBA has stated that it continues to expect inflation to be around 2.25% over the next couple of years as above-trend GDP growth reduces spare capacity in the labour market and there is an associated pick-up in wages growth." Shane Oliver, AMP Capital: "While economic growth picked up a notch in the first half of the year its premature to start raising rates as uncertainty remains around the outlook for consumer spending, the housing cycle both in terms of construction and home prices has now turned down, and wages growth and inflation remain low. So remaining on hold makes sense and this is likely to remain the case for some time to come." Alison Booth, ANU: "Fundamentals have not changed sufficiently to warrant changing the cash rate." Richard Robinson, BIS Oxford Economics: "inflation and wages growth is low." Paul Dales, Capital Economics: "The RBA is patiently waiting to see if the unemployment rate falls as it is hoping and inflation rises back to the 2-3% target rate. I suspect it will be waiting for a long time yet." Saul Eslake, Corinna Economic Advisory: "The RBA has made it clear that although it thinks the next move in interest rates will most likely be up, it is in no hurry to act on that inclination. And nothing has happened since the last meeting to have prompted them to change that view." Peter Gilmore, Gateway Bank: "The economic fundamentals remain largely unchanged." Mark Brimble, Griffith Uni: "No reason to move with inherent weakness in the economy exacerbated by political and regulatory uncertainty both domestically and internationally." Peter Haller, Heritage Bank: "There is no reason for the RBA to change rates at the present time." Paul Bloxham, HSBC Bank Australia Limited: "Inflation is still below the target band." Alex Joiner, IFM Investors: "The RBA finds itself between a rock and a hard place, the economy does not as yet justify higher policy rates, but equally it can not foster any better conditions that might see inflation accelerate more quickly because of the financial stability constraints it has, rightly in my view, it has also chosen to focus on." Michael Witts, ING Bank: "Despite the increase in mortgage rates from one of the majors, this is unlikely to alter the RBA stance." Leanne Pilkington, Laing+Simmons: "There’s no compelling reason for the RBA to adjust the official cash rate at this time. Of greater interest is the approach the banks are taking with their lending terms. Some are cutting fixed rates in an attempt to build market share. Honeymoon interest rate deals are in vogue to attract first home buyer attention, but it’s necessary to crunch repayment numbers based on the actual rate you’ll be paying once the honeymoon is over. There’s significant rate movement irrespective of the RBA at the moment." Nicholas Gruen, Lateral Economics: "That's what they keep saying they'll do." Mathew Tiller, LJ Hooker: "No major changes to economic conditions over the past months will see RBA hold the cash rate steady. In addition banks and lenders continue to change their interest rates independently of the RBA." Michael Yardney, Metropole Property Strategists: "There is no reason to alter interest rates. Our weakening housing markets, low inflation rate and soft wages growth suggest no rise in rates is imminent in the medium term. If anything this would dampen already sluggish consumer confidence which has already taken a hit over the last month." Mark Crosby, Monash University: "The RBA has signalled its intent to hold rates for some months yet, though it is good to see some discussion about whether the current inflation target remains appropriate." Dr Andrew Wilson, My Housing Market: "Macro environment relatively unchanged although out of cycle rate rises will be closely monitored by RBA if the level of increases impacts already constrained consumption." Alan Oster, NAB: "The RBA has stated that for the time being, they wish to be a source of stability and confidence in the economy. Rates are low and supporting economic growth which should see employment continue to grow and the unemployment rate decline further. At present there appears to be some degree of spare capacity in the labour market with relatively weak wages growth and inflation only just around the bottom of the RBA’s target band. The RBA is likely to continue this on this track until it is convinced spare capacity has fallen, wages growth is lifting and inflation rising more generally. This is only expected to occur gradually." Jonathan Chancellor, Property Observer: "The central bank doesn't need to make any move." Matthew Peter, QIC: "While the RBA is clearly on hold for the time being, the market is not pricing a rate hike until 2020. But with growth picking up, the labour market tightening and the AUD heading to US70c, the RBA will surprise markets with a rate hike, probably as soon as the June quarter of 2019." Noel Whittaker, QUT: "No reason to move either way." Nerida Conisbee, REA Group: "The next move is still likely to be an increase but for now, the economy is not strong enough to start increasing." Christine Williams, Smarter Property Investing Pty Ltd: "We have had a positive effect re unemployment, now under 6% together with a strong outlook in the job sector, both with full time and part-time positions. I feel this needs to stay on an upward trend [for] least 1 more quarter before the Reserve Bank increases rates." Janu Chan, St.George Bank: "Ongoing low inflation and expectations it will stay low for some time allows the RBA room to leave rates on hold." Brian Parker, Sunsuper: "Still plenty of labour market slack, and wage and price inflation not picking up anywhere near fast enough to prompt higher rates." Richard Holden, UNSW: "They should cut but can't. Labor market is weak. Inflation low." Clement Tisdell, UQ-School of Economics: "The Australian economy is not overheated. Demand pullinflation is not at work. Cost push could become a problem. Private interest rates are liable to increase." </body></html>

j.ballantyne1990-6AQqhLzZaK

Sydney price downturn to last two years: Finder survey

<html><body>
GUEST OBSERVER
<div>
As expected the Board of the Reserve Bank decided to leave the cash rate unchanged at 1.50 percent.
We were most interested in how the Governor assessed the housing market in the light of strong auction clearance rates and some evidence of higher price growth in Sydney and Melbourne.
Recall that the key assertion in the statement following the August cut was that “the likelihood of lower interest rates exacerbating risks in the housing market has diminished”. It is not surprising that this sentence was not repeated in the September statement. Arguably if we had not seen the evidence in the Sydney and Melbourne markets the Governor would have been sufficiently emboldened to repeat that assertion.
The other key theme around housing in the August statement was that “dwelling prices have been rising only moderately over the course of this year”. This statement repeats that assertion with an important qualification: “dwelling prices OVERALL have risen moderately over the past year”. That would appear to be recognition that the term “moderate” no longer applies to some parts of the country, specifically Sydney and Melbourne.
There have been some other subtle changes of language in this statement. In August, overall growth was described as continuing “at a moderate pace”. In this statement growth is described as: “overall growth is continuing”, arguably leaving out the word moderate indicates that he is not prepared to commit until tomorrow’s release of the GDP report. Equally, in August, areas of domestic demand were described as “expanding at a pace at or above trend”. In this statement areas of domestic demand are merely described as growing.
There is no change in the assessment of the key policy variables – inflation and employment. Inflation continues to be described as “quite low” and is expected to remain so for some time. Labour market indicators are still described as “somewhat mixed”.
The global outlook remains the same. The global economy is expected to grow at a lower than average pace and “China’s growth appears to be moderating”.
The final paragraph in the statement is a replica of the statement used in June following the May rate cut with a very clear neutral bias being signalled. While this is an accurate assessment of current thinking it seems highly unlikely that the outgoing Governor would have left the new Governor with any particular commitment. Better to allow total flexibility over the next few months.
Conclusion
Since the beginning of 2013 when interest rates had dropped to 3.00% the Bank has cut rates on six occasions and all of them have been in the months February, May, August and November. These dates are significant in that they coincide with an update on the inflation outlook and also the release of the Bank’s quarterly Statement on Monetary Policy when the Bank’s forecasts are reviewed. This means that the next possible time of a rate cut would be November this year.
We expect that rates will remain on hold in November. Our forecast for underlying inflation in the September quarter is 0.5% which, following a 0.5% for the June quarter, allays concerns that the Bank may have had( following the 0.2% print for the March quarter) that inflation was tumbling out of control.
We would also like to think that the new Governor might adopt a slightly wider target band (1-3%) when he reaches agreement with the Government on the new Inflation Target. A decision like that would take further pressure off a  pursuit of a 2.50% inflation print given current global conditions. It would not be a good policy approach to pursue an unrealistic inflation target at the possible expense of destabilising asset markets and a further increase in in household debt ratios.
This expectation is not contingent on our forecast of steady rates in November given that we have to reluctantly recognise that a change in target is not likely.
Other factors that might prompt a rate cut in November would be a rampant AUD in response to further evidence that the Fed will remain on hold in December. However, whilst we think that decision by the Fed is unlikely we also expect that commodity prices will be weighing on the fair value of the AUD by that time.
Today’s statement really only provides a reasonable signal that the confidence around housing we saw in August has been shaken a little, slightly lowering the chances of that November cut.
Developments in the real economy will also be important. We expect tomorrow’s GDP report to print 0.5% for the quarter and 3.3% through the year. That will be the most up to date real sector information for the November meeting and of course represents around half a percent faster growth than the RBA’s current trend assessment.
While the Governor continues to describe labour market indicators as “somewhat mixed” our own research is more encouraging with employment growth likely to hold in the 1.5-2 percent range.
Overall we do not expect any change at the October meeting and are also anticipating steady rates in November.
 
</div>
BILL EVANS is chief economist of <a href="https://www.westpac.com.au/" target="_blank">Westpac</a>.
</body></html>

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