RBA keeps rates on hold
This fortnight’s economic news was headlined by the RBA’s decision to keep the cash rate on hold at 4.1%. Many economists were split on whether the RBA would hold or hike rates again given the new data received over the month, with this decision being only the second pause in the current hiking cycle (following the first pause in April). The decision was attributed to the fact that interest rates have already increased by four percentage points and the need for the board to have more time to assess the impact of these previous increases and the economic outlook. The RBA indicated further increases to the cash rate may be needed, so we’ll see what the August meeting has in store.
WA’s massive construction pipeline chips away
Building activity was also released on Wednesday, revealing some headway has been made on WA’s massive residential construction pipeline. The total number of dwellings in the pipeline fell by 2,630 over the March 2023 quarter, as the number of dwelling completions rose slightly while the number of commencements fell. While this is good news for relieving some of the backlog of housing supply, a fall in building commencements combined with the decline already experienced in building approvals means future housing supply is looking insufficient for the growing population.
Will US inflation continue to fall?
In the US, inflation data was released this week, with headline inflation falling more than expected to 3% year-on-year to June. This is down from 4% in May and came in below expectations of 3.1%. This is largely due to a slump in energy prices following massive rises this time last year. Encouragingly though, core inflation also surprised to the downside, coming in at 4.8% year-on-year. This is below the expected 5% reading and is also down from the 5.3% recorded in May, showing the fall in the pace of inflation is more broad-based than just energy.
For the latest economic reports, see CCIWA’s Economic Insight page.