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Graham Cooke, Head of Consumer Research at Finder, highlighted the eagerness among homeowners for additional rate cuts, stressing the societal expectations on banks to pass on these reductions. This aligns with changes in RBA’s policy discussions, increasingly favouring rate cuts if inflation continues to cool.
Paul Bloxham, HSBC's Chief Economist for Australia, NZ, and Global Commodities, noted that while the RBA's inclination toward rate cuts is evident, factors such as weaker GDP figures and the robust local labour market may introduce caution. The recent GDP data showed a surprising dip due to decreased public demand, counterbalanced by gains in private sector activity, which complicate the decision-making context for the RBA.
Despite these indicators, Bloxham pointed out that the strong employment landscape, with stable unemployment rates and rising job vacancies, combined with swift wage growth, might not obstruct a potential rate cut. Nevertheless, concerns linger over the rapid wage increases against a backdrop of diminishing productivity, raising the specter of elevated unit labour costs.
On a global scale, slowing economic growth and high policy uncertainty, especially with impending changes in US tariffs, are expected to influence Australian economic conditions by exerting disinflationary pressures. These global dynamics, when coupled with domestic indicators, support the likelihood of an RBA rate cut.
The consensus among experts anticipates further rate reductions beyond July, with projections for additional cuts in both August and November, underscoring the continued focus of the RBA on inflation management. The overarching strategy remains anchored on the swift decline of inflationary trends to justify ongoing adjustments in the cash rate.
Published:Monday, 7th Jul 2025
Author: Paige Estritori
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