We aren't convinced that the further pick-up in trimmed mean inflation in the Monthly CPI Indicator in April will be replicated in the quarterly measure that the Reserve Bank of Australia considers more reliable. And with consumption growth set to remain very weak this quarter, the hurdle for another rate hike is high. Nonetheless, the key risk is that the likely rebound in real household incomes across the second half of the year will be accompanied by a pronounced rebound in consumption growth at a time when inflationary pressures haven't been brought to heel yet. Accordingly, the RBA won't be able to lower interest rates this year.
Become a client to read more
This is premium content that requires an active Capital Economics subscription to view.
Already have an account?
You may already have access to this premium content as part of a paid subscription.
Sign in to read the content in full or get details of how you can access it
Register for free
Sign up for a free account to:
- Unlock additional content
- Register for Capital Economics events
- Receive email updates and economist-curated newsletters
- Request a free trial of our services