August Observations
Interest Rate Outlook
The RBA kept rates on hold at 4.10% at their August meeting. Another lower monthly & quarterly inflation read and further weakness in discretionary spend saw the bank again keep rates steady. However they have flagged further raises to potentially come given the sticky inflation environment, specifically in services.
The market still is looking for direction for what the terminal rate (where prices are stable and employment considered full) will be.
Inflation Outlook
The monthly CPI indicator annual movement dropped to 5.4% in June, down from 5.5%. The quarterly data was also released showing an annual increase of 6%, which is lower than 7% in March and 7.8% recorded in December 2022. Again this drop was more than predicted which lead to mixed views on the eventual course the RBA would take in August (opting to leave rates unchanged as per above). Whilst this is positive, 6% inflation is still very high and work to be done to get this back to the RBA’s target of 2-3%.
The movement for the monthly CPI excluding volatile items and holiday travel dropped only slightly to 6.1% in June, down from 6.4% in May. This measure excludes fruit and vegetables, fuel and holiday travel.
Other notable items
- Michelle Bullock will take over as the RBA Governor from 17 September with a number of changes to come in including reducing interest rate decisions to 7 times per year from 11 and post-meeting conferences to promote transparency around these decisions
Upcoming Lodgement Dates for August:
- 21 August – Lodge and pay monthly business activity statement
- 25 August – June Quarter BAS lodgement and payment due
- 28 August – Taxable Payments Annual Report due
