Westpac

We have revised our view of the most likely scenario for the path of the RBA’s cash rate, pushing out the start date of the rate-cutting cycle from February to May, but more front-loaded than previously assumed.

Key insights from the week that was.

Wages growth has peaked and started declining. At current rates, even quite low productivity growth would be compatible with inflation being sustained at target. So why is the RBA so worried?

Employment: +15.9k (from +61.3k). Unemployment Rate: 4.1% (from 4.1%). Participation Rate: 67.1% (from 67.2%).

There are no changes to Westpac’s wage forecasts.

We expect the RBNZ will cut the OCR by a further 50bps to 4.25% at its November Monetary Policy Statement meeting.

Key insights from last week that was.

The unemployment rate rose to 4.8% in the September quarter, a smaller than expected rise due to more young people exiting the labour force. Wage growth is moderating broadly as expected.

The RBA Board left the cash rate unchanged at 4.35%, as expected. Disinflation on track but Board still vigilant to upside inflation risks and is not ruling anything in or out.