We're sending this Australia & New Zealand Economics Weekly one day earlier than usual because our Singapore office is closed on Friday for National Day.
Financial markets have largely shrugged off the RBA's tightening bias, as they are still betting that rate cuts will be on the agenda before the year is out. In our view, that's mostly wishful thinking. Although domestic demand is likely to be a touch weaker than the RBA is anticipating, languishing productivity growth will preclude a rapid easing in capacity pressures. Therefore, we still think the Bank will wait until Q2 2025 before it starts loosening policy.
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