Underlying inflation in Q2 didn’t pick up nearly as much as the RBA had expected. Although the path to disinflation is likely to be bumpy, we think the Bank will judge policy sufficiently restrictive, not least given the deepening housing downturn. We’ve therefore dropped our forecast for a final 25bp hike in August and now expect the RBA’s next move to be a cut, albeit not before the second half of 2027.
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