5 reasons the RBA will not cut rates in 2024, & the jobs market data makes it more certain

The employment report from Australia yesterday was a shocker:

The consensus take on the report is that this cements no further rate hikes from the Reserve Bank of Australia. In addition, market pricing shifted from a 25bp rate cut in November to a cut in September.

HSBC, however, take a different view. Coming into this year HSBC were already tipping no RBA cuts in 2024 for 5 reasons. In (very) brief:

core inflation is still well above the RBA’s target and is being held up by sticky components, particularly rents, and services productivity in Australia has been very weak, driving unit labour costs much stronger than is consistent with the RBA’s inflation target the RBA cash rate hikes (+425) were not as great as those from the Fed (+525bp) , ECB (+450) or Bank of England (+515), and so the RBA’s cash rate is, on the face of it, less far above a “neutral rate” than in these others, and is therefore less restrictive Federal fiscal policy is expected to loosen in mid-year, tax cuts on the way still high commodity prices, driven by supply constraints, geopolitical uncertainty, the energy transition and an expected ongoing policy-driven recovery in China, are set to underpin national incomes

Yesterday’s jobs report, says HSBC:

slight increase in unemployment and minimal job growth may be seen positively by the RBA, indicating some labour market loosening but the employment-to-population rate remains high, suggesting continued labour market tightness further labour market easing will be needed before the RBA reverses course

AUD/USD update:

The post 5 reasons the RBA will not cut rates in 2024, & the jobs market data makes it more certain first appeared on Investorempires.com.

 

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