Homeowners can likely breathe easier, as the Reserve Bank is expected to keep interest rates unchanged.
Reserve Bank Governor Michele Bullock, along with the bank’s board, is set to convene on Monday and Tuesday. Economists anticipate that the cash rate will remain steady at 4.35 percent.
This outlook comes on the heels of an unexpected decline in inflation, despite it still exceeding the bank’s target range of two to three percent.
Data from June indicated a drop in headline inflation from four percent to 3.8 percent, marking the lowest levels since the onset of the Iran war.
The trimmed mean inflation, which the RBA prefers as a measure, held steady at 3.6 percent.
Senior economist at NAB, Taylor Nugent, said the RBA would likely fall into line with market forecasts.
“The RBA would need a push to deliver further tightening and the net of data flow since May has not given them that push,” he said.
“Unemployment is a little above their forecast and underlying inflation marginally lower than feared.”
Nugent said the RBA would likely monitor the impact of higher fuel prices on inflation following the removal of the federal government’s fuel excise discount and oil prices spiking due to renewed volatility in the Middle East.
“NAB expects the next move (by the RBA) will ultimately be down, but inflation risks do remain elevated,” he said.
HSBC chief economist Paul Bloxham said the central bank would likely take a wait-and-see approach before choosing to make a move on the cash rate.
“That being said, as inflation is still above target, we expect the central bank to continue to express concern that inflation is too high,” he said.
“We see the downswing in growth being sufficient that the RBA begins to cut its cash rate in H2 2027.”
Bloxham said there was still a chance, if inflation does not fall fast enough, that the RBA could still lift rates later in 2026.
“With trimmed mean inflation now having been above the mid-point of the RBA’s target band for over four years, we see the board’s tolerance for upside surprises or a slower-than-currently-projected return of inflation to target, as likely to be low.”
Bullock will also face a parliamentary inquiry on Friday, where the bank’s board will come under scrutiny.
Tuesday will also see fresh figures on business confidence released when NAB’s latest monthly survey is unveiled.
Wall Street is meanwhile on the advance, with the US economy unexpectedly shedding jobs and amid dampened expectations the Federal Reserve will raise interest rates.