New Reserve Bank governor Michele Bullock is almost unanimously expected to keep the cash rate unchanged at 4.1 per cent on Tuesday, but there’s still plenty of reasons to closely watch the statement accompanying her first rates decision.
The RBA has long held the view that inflation will only get back to its 2 per cent to 3 per cent target by the end of 2025. Does tHousing has been a thorn in the RBA’s side this year, with the rebound in house prices getting the bank worried about a boost to consumption, and surging rents keeping inflation elevated. With, the bank’s concern is unlikely to have cooled.
Morgan Stanley equity strategist Chris Nicol expects August’s data will show a 6 per cent bounce, following consecutive declines of 8 per cent in June and July. But that will still leave approvals 24 per cent lower than a year ago, which has big implications for construction and activity and employment in the sector, which makes up about 10 per cent of the labour market.