Reserve Bank of Australia: September hike expectations strengthen – TD Securities
TD Securities’ Prashant Newnaha now expects the Reserve Bank of Australia (RBA) to raise the cash rate by 25bps to 4.60% at the late-September meeting. The change follows stronger-than-expected Q2 Gross Domestic Product (GDP) and firm discretionary consumption.
TD Securities' analyst Prashant Newnaha anticipates the Reserve Bank of Australia (RBA) will raise the cash rate by 25 basis points to 4.60% during their late-September meeting. This prediction follows robust Q2 GDP growth and increased discretionary consumption. While Newnaha believes growth is slightly above trend, he notes that the Bank has indicated a need for economic slowdown to curb inflation.
The Q2 GDP data strengthens the case for a rate hike, with implied quarterly growth in Q3 and Q4 expected at 0.3% q/q to meet the RBA's August 26 Monetary Policy Statement forecasts. S&P's Composite PMI survey for July and August suggests growth will improve in Q3 and potentially surpass the RBA's Q3 GDP projection. Household consumption aligned with the Bank's 0.4% q/q projection, but discretionary spending has accelerated in recent quarters. The monthly household spending data indicates discretionary spending remains strong.
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