At least three rate cuts expected despite tariff-induced global volatility, says ANZ | The Business
ANZ senior economist Adelaide Timbrell joins The Business to unpack interest rate forecasts following the latest inflation data for the March quarter. She says ANZ expects three interest rate cuts in 2025 – at the May, July and August RBA meetings.
The latest data shows headline annual inflation remained steady at 2.4 per cent, and underlying inflation dropped to 2.9 per cent in the 12 months to March, from 3.3 per cent in the year to December. Despite quarterly inflation coming in a bit higher than expected, Adelaide Timbrell says the likelihood the Reserve Bank will keep interest rates on hold is very slim, going as far to say she thinks there’s a “near certainty” the RBA will cut rates by 25 basis points in May, saying ” in a vacuum, a 0.7 per cent quarter on quarter trimmed mean result for inflation, would be something that could equally make an argument for a hold or a cut. But given the global backdrop, all the uncertainty that’s been revealed from ongoing tariff negotiations and retaliations, it’s very unlikely (we’ll) see a hold.”
She says Australia’s economy is in a good position to weather volatility, saying “it’s a good year to have a bad year”, because of Australia’s solid labour market, household resilience to higher interest rates, and a growing consumer recovery. But she says ANZ Research has downgraded its US GDP forecast from 2 per cent this year to 1.5 per cent. She says ANZ has also materially downgraded its China GDP forecast, Indian GDP forecast and Asia ex China GDP forecast.
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