Westpac chief economist, Luci Ellis, the RBA is expected to keep the cash rate unchanged at 4.35% in the upcoming policy meeting. Westpac analysts pointed out that the recent labour force data underscored robust labour demand. With employment rising and the UER steady, this ongoing alignment of demand/supply indicates a balanced labour market and a resilient economy, supporting the outlook for accelerated economic growth in 2025 as inflation eases and the RBA can begin to relax its policy. That said, Westpac economics also highlight that 2Q24 National Accounts reaffirm that the economy is sluggish, revealing that private demand, especially household consumption, is more fragile than previously assessed. Wespact analysts further explain, the RBA has firmly signalled that any policy easing won’t happen until next year, and the latest accounts are unlikely to alter this stance. A significant shift in data, for example, a quicker decline in inflation and weaker labour market results, would be necessary to change this outlook, something that Westpac does see at its base case. Ellis and team maintain Westpac’s call for the first rate cut in February 2025.

CBA Economics Gareth Aird and team call for the RBA to keep the cash rate on hold “in a straight forward decision” adding the data has been broadly in line with the RBA expectations or slightly softer. That said, CBA Aird points out that the softer data opens the door for the Board to “dial down its hawkish rhetoric a touch” and while having little in terms of a material change, the statemen will take “less hawkish” tone from the August MPS. Aird adds that the Fed’s cut his week will subtly influence the RBA’s policy discussions and while the RBA typically follows its own path, the similar unemployment trends in both countries can’t be ignored. CBA explains further that the RBA is aiming to bring inflation back to target while maintaining as many labour market gains as possible. The RBA won’t want to lag too far behind the Fed in easing policy. However, given current data, it’s too soon for an RBA policy pivot, with Aird restating CBA call for a shift in 2024.

According to ANZ Senior Economist Catherine Birch and team, the RBA will maintain the cash rate at 4.35% at the September MPM; ANZ Birch adds that the team also expects the guidance to “retain much of the hawkish language of the August meeting and the communication since” and notes that the Board is likely to weigh only two options: “hold or hike”. ANZ Birch also warns that the recent Fed rate cut is highly unlikely to sway the RBA’s decision. In her recent speech, Gov Bullock stressed that achieving full employment hinges on price stability, highlighting the RBA’s ongoing challenge with inflation compared to the Fed’s shift towards the labour market. Looking ahead, ANZ Birch reaffirms ANZ’s forecast for the RBA to start easing in Feb 2025, though current labour market momentum might suggest a potential delay.

Macquire’s Lead Global Economist Daniel Fabbro joins consensus calling for the RBA to keep the Cash Rate target unchanged at 4.35%.

GS: Looking to September’s meeting, GS’s Boak expects the RBA to keep rates on hold at 4.35%, with the attending statement retaining the neutral forward guidance that the Board is not “ruling anything in or out” and that “policy will need to be sufficiently restrictive until the Board is confident that inflation is moving sustainably towards the target range”. In the post-meeting press conference, we expect Governor Bullock will reiterate previous guidance that the Board does not expect to cut rates “in the near term”. We also expect that Governor Bullock will downplay the implication of the Fed’s 50bp rate cut for the RBA, likely noting that core inflation is higher in Australia. That said, Boak is mindful that Governor Bullock’s guidance could be incrementally dovish compared to August’s statement given the softer domestic consumption data. In particular, Governor Bullock could note the Board did not consider hiking rates in September, which would mark a shift from previous meetings (the Minutes have noted the Board has considered both hiking and holding rates at every meeting since March).

NAB: NAB’s Oster expects the RBA to remain on hold at next week’s meeting and until May 2025. However, the recent data flow skews the

risk around our call to February. We still expect the RBA to cut rates by around 125pbs over a year or so once the cutting phase begins, taking the cash rate back to around neutral at 3.1%.

Bruce Kasman and the Global Data Watch team expect the RBA to keep the cash rate unchanged at the September MPC. That said, in the JPM team’s estimation, the Board is highly likely to maintain the August MPM narrative that inflation will take some time to move sustainably inside the target band. According to JPM economics, this notion would push back against the idea that the RBA is mulling the start of the easing cycle, particularly in the wake of the FMOC outsized 50bps cut. JPM analysts highlight, however, that the message will be somewhat undermined by the monthly CPI indicator, due the day after the meeting. JPM forecast if the y/y headline figures to dip inside the target band for the first time this cycle.

GS Economist Andrew Boak expects the RBA to keep the Cash Rate steady at 4.35%

SocGen economist Stephen Pratt explains, the recent unemployment data strengthens SocGen’s view that the RBA will stay on hold for the rest of the year, with diminishing chances for a dovish shift. SocGen Pratt notes that while the FMOC cut signals easing, the outlined pace doesn’t provide the cover for the RBA to pivot unless there’s clear data weakness. Pratt further notes, key inflation and jobs reports carry asymmetric risk; a weak print is more likely to trigger a reaction than a small beat. With the August CPI expected to align with the RBA’s forecast, further hawkish signals from the central bank are likely

MS Australia Economist Chris Read expects the RBA to keep the Cash Rate on hold at 4.35% and adds that the Statement is unlikely to shift much with the ensuing presser focusing more on near term rate stability rather than the hawkish rhetoric in the August MPS. MS Read adds that Gov Bullock is expected to reiterate that rate cuts this year are not on the table. Domestically, recent data has largely met the RBA’s expectations with the Governor likely to emphasise on the effects of recent Government stimulus. Globally, the RBA is expected to highlight that it will trail other central banks in the easing cycle, given Australia’s lower level of policy restriction, slower inflation progress, and the fiscal stimulus in play. A higher AUD could also help ease imported inflation. MS Read highlights that MS outlook is for a cautious tone from the RBA, with the first rate cut likely in May 2025, barring any major global downturn.

CITI Research Faraz Syed and Josh Williamson call for the RBA to leave the Cash Rate unchanged at the September meeting. The CITI economics team refer to the recent August LFS showing tight labour market conditions, with unemployment holding steady but still well below NAIRU, which may be closer to 5.0%. Employment growth beat expectations, while other key metrics like underutilisation, hours worked, and the employment-to-population ratio either remained stable or improved. This suggests that any loosening in the labour market is happening gradually. With that in mind, the the CITI team concludes there is enough evidence for the RBA “to follow the Fed”, in addition, CITI’s outlook is “no rate cuts this year and only 75bps worth of cuts next year, starting in February”.

According to the HSBC economics team, the RBA is expected to maintain the Cash Rate on hold at the September meeting. HSBC analysts, however, are focusing on the RBA message on whether or not the Board will maintain the hawkish narrative of the August MPM in light of other major central banks already cutting rates. HSBC analysts note that market participants will be watching closely for any signs of a shift in rhetoric that could signal a change in the rate path