🏦🇦🇺Cable FX Macro Weekly Note: RBA October Policy Decision

**As seen in Risk In The Week report 09/29/23, subscribe at cablefxm.co.uk/reports

The September meeting saw the RBA leave its Cash Rate target unchanged at 4.10%, this was in line with the majority of economists’ expectations. The central bank said that Australia is going through a period of below-trend growth, however, it managed to send the signal that further monetary policy may be required. The board said that higher rates are working through the economy as they balance supply and demand. They added that the decision to pause rates will give them a chance to assess the impact of previous hikes. On inflation, the board said that Australian consumer prices have passed their peak, while they don’t expect to reach the 2%-3% target until late 2025, the RBA now sees inflation at 3.25% next year.

Analysts at Goldman Sachs noted that economic conditions in Australia remain quite resilient despite the more than 400bps of tightness in the policy rate. Goldman Sachs expects inflation to trend lower but noted that an increase in wages, a strong rebound in oil prices, and a depreciation in the A$ will likely delay the disinflation process. The desk is now forecasting 2023 Australian CPI at 5.7%, this is a 10bps upside revision to their previous call. Goldman Sachs now sees the RBA hiking rates in November to 4.35% and pushed back on the start of the easing cycle to 4Q 2024.