Synopsis:

BofA expects the RBA to keep rates unchanged at its December meeting, citing mixed economic data. While consumption has improved, job growth has slowed, and inflation pressures are easing, supporting a "wait and see" approach.

Key Points:

• Positive Economic Indicators:

  • Household Spending: Retail sales and household consumption data showed notable improvement in October, driven by higher real wage growth.

• Negative Economic Indicators:

  • Job Market Weakness: Job growth surprised to the downside for the first time in seven months.
  • Easing Inflation: Core monthly CPI excluding volatile items fell by 0.2% in October, while inflation expectations continued to moderate.

• Policy Outlook:

  • The RBA is expected to remain in a holding pattern but could cut rates if economic conditions deteriorate faster than expected.
  • BofA maintains its call for the first rate cut in April 2025.

Conclusion:

BofA believes mixed economic data will keep the RBA cautious at its December meeting, holding rates steady while closely monitoring further developments. A rate cut is still expected in April 2025 if economic weakness persists.