RBA interest rates: National Australia Bank’s Rodrigo Catril says ‘we still have an inflationary problem’

Already a subscriber?The lilting Hispanic voice who regularly wakes up Australia’s business community via a daily podcast says the Reserve Bank will not find it easy to declare victory on inflation and may wait until 2025 to start cutting rates.

“We believe the RBA will be on course to cut in November, but the resilience of the labour market may prove to be a challenge,” says Catril whose main responsibility is to forecast economic outlooks for major economies. That decline will allow the central bank to push the cash rate down to around 3.5 per cent next year, which would be equivalent to three or four quarter-point reductions.

“China has a pretty good record in delivering what they say – their commitment and initiatives to support their growth strategy are encouraging,” Catril says. That’s twice the amount he expects for the RBA, which is why Australian government bond yields will gradually become more attractive than US Treasuries.

The NAB economist is optimistic that the Australian dollar will follow the yuan higher as China’s economy improves.Who’s next? Financial markets are fully priced for both central banks to start lowering their benchmarks by July.

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