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2h ago

Stronger GDP Upside Narrows RBA Cut Path as Bullock Cautions on Rising Demand

Stronger growth has traders paring expectations for further reductions.

Public holidays and the latest release of a video game console were all important elements in Australia's recent GDP growth, something that might mean there may not be many interest rate cuts left to come.
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Overview

  • Australia’s GDP grew 0.6% in the June quarter, lifting annual growth to 1.8% and topping the RBA’s 1.6% projection.
  • RBA governor Michele Bullock said sustained strength could mean there are not many interest rate declines left to come.
  • Markets still price a 25-basis-point move in November but have trimmed total expected easing to about 44 basis points from roughly 50.
  • The central bank in August cut its medium‑term productivity assumption to 0.7%, lowering estimated potential growth to around 2% a year.
  • Measured productivity ticked up only modestly as business investment fell and intellectual property investment rose, reinforcing concerns about capacity and disinflation.