Latest data under spotlight as pressure builds on rates
As expectations grow for a second cash rate hike in 2026, more important information on the state of the Australian economy will be released.
Gross domestic product, consumption, income and productivity data for the December quarter in the national accounts will be announced on Wednesday.
Australia’s central bank will hold its second monetary policy board meeting in mid-March after raising the cash rate by a quarter point to 3.85 per cent in January.
This followed January data showing inflation was coming in hot, with the consumer price index at 3.8 percent.
There is a widespread prediction that the Central Bank will increase interest rates again in 2026; NAB economists predict the board will raise interest rates to 4.1 percent in May, then keep them on hold until the end of 2027.
For rates to remain stable for the rest of 2026, the bank says the data would need to change quickly, with a “significant downward revision to inflation forecasts”.
ANZ economists also expect a 0.25 percentage point increase in May.
The Reserve Bank’s inflation target range is between two and three per cent and it relies on figures from the Australian Bureau of Statistics to monitor the situation.
It previously became the first major central bank to reduce interest rates following the increase in inflation caused by the Covid-19 epidemic.
NAB Australia chief economic officer Gareth Spence said the bank forecast the increase in May would be the last in 2026.
“Household spending has really accelerated, disposable incomes have increased over the last year and purchasing power has increased,” he said.
Mr. Spence said attention remained on government spending related to the federal budget due in May, but all eyes should turn to the private sector.
He stated that the unemployment rate remained at a low level of 4.1 percent.
Mr Spence said the state government’s infrastructure pipelines were also stabilizing as more projects approached completion.
Meanwhile, Wall Street investors are dealing with some lingering concerns, particularly regarding financial and technology stocks.
Major US indexes suffered their biggest monthly percentage declines in a year, and all three closed significantly lower on Friday.
The Dow Jones Industrial Average fell 521.28 points, or 1.05 percent, to 48,977.92 points, while the S&P 500 lost 29.98 points, or 0.43 percent, to 6,878.88 points.
Nasdaq Composite lost 210.17 points, or 0.92 percent, to 22,668.21 points.
Australian stock futures fell 20 points, or 0.21 percent, to 13,722.
The S&P/ASX200 rose 23.3 points on Friday, up 0.25 percent to 9,198.6 points, and achieved its best close in February with an increase of 3.7 percent.
More broadly, the All Ordinaries rose 26.9 points, or 0.29 percent, to a record close of 9,435.6.
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