Australia's Central Bank to Hold Cash Rate Through 2026 Before Cutting Twice in 2027, Jarden Says
Jarden continues to expect the Reserve Bank of Australia (RBA) to hold its cash rate at 4.35% through the end of the year before implementing two cuts in 2027 to take the rate to 3.85%, the investment firm said in an Aug. 5 note.June quarter inflation came in softer than the central bank expected, and combined with a cooling labor market and a widening housing downturn, this sets up a case to hold borrowing costs steady at next week's policy meeting, Jarden said."In our view, the consumer is still soft, and we expect rising rents into next year will ration budgets, and recent GDP prints flattered by lumpy data center spend," it added.Jarden expects Australia's unemployment rate to drift to 4.8% over the course of 2027 from 4.4% currently as decelerating growth bites and employment growth fades toward 0.5%.While the labor market has held up better than Jarden expected, the resilience appears to be thin, as slack moved into underemployment, under-utilization and softer hours, which should allow inflation to keep cooling without a sharp jump in unemployment and provide the RBA room to ease, the investment firm said.
