Rate watchers eye inflation data and RBA chief’s speech
Economists are awaiting key quarterly inflation data but expect the Central Bank to keep interest rates steady despite renewed conflict in the Middle East that has sent oil prices rising again.
The Australian Bureau of Statistics will release the second quarter of its consumer price index, which shows household inflation, on Wednesday.
Reserve Bank governor Michele Bullock will also speak in Sydney on Tuesday and her speech will be closely watched for indications of how the central bank plans to approach inflation risks.
NAB senior economist Taylor Nugent said his bank does not believe another interest rate hike is likely in 2026, even though oil prices have risen again due to tensions between the US and Iran.
“Our position is that there will be sufficient confidence in the labor market that growth will slow so that there will be no need to tighten rates further,” he told AAP.
This is despite risks such as high inflation, renewed cost pressures and new oil price levels.
Mr. Nugent said inflation data released on Wednesday would reflect the calm during the conflict, when fuel prices fell.
The Reserve Bank board will meet in just over two weeks and the Commonwealth Bank said the “background is changing rapidly”.
“The housing market has deteriorated, household spending is slowing from the high pace seen at the beginning of this year, and the ability of businesses to cover higher costs is likely weakened after three interest rate hikes,” the bank’s analysis said.
The Central Bank is expected to keep interest rates steady for the remainder of 2026, CBA said.
Research by ANZ predicts that annual average inflation will be reduced by 3.7 percent, slightly below the Central Bank’s forecast.
Combined with broader evidence that activity is slowing, this could prompt the central bank to go on hold in August.
However, ANZ said another increase in August or November could not be ruled out, given the re-escalation of tensions in the Middle East.
Investors, who have turned to technology stocks in recent years with the promise of growth in artificial intelligence, have become concerned about the need for increasing capital expenditures for artificial intelligence.
Meanwhile, oil prices have interestingly provided some relief for Wall Street investors looking to dump chip stocks amid concerns about big spending on artificial intelligence ahead of earnings reports.
Crude oil futures tumbled 3 percent on Friday as investors profited from a big rally in the previous five trading sessions after sources said China was pushing to restart stalled Iran peace talks.
Dow Jones index increased by 235.60 points (0.46 percent) to 51,947.25 points, S&P 500 index increased by 3.68 points (0.05 percent) to 7,411.98 points and Nasdaq lost 161.87 points (0.64 percent) to 24,975.82 points.
Australian stock futures rose 48 points, or 0.55 percent, to 7,611.
The S&P/ASX200 fell 66.7 points, or 0.75 percent, to 8,772.3 points on Friday, while the overall All Ordinaries lost 76.6 points, or 0.85 percent, to 8,941.5 points.
