Weaker consumption would lift risk of earlier rate cut

Whereas the Reserve Bank of Australia expects the household savings rate to rise over the course of this year, we think that households will lift real consumption alongside a likely rebound in real incomes. Even so, our GDP growth forecasts are already more pessimistic than the RBA’s and further belt-tightening by households may well prompt the Bank to start lowering rates this year instead of our forecast of Q1 2025.

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