Goldman Sachs: The RBA's interest rate cut cycle may start earlier than the end of this year.

On October 16th, Goldman Sachs pointed out that the Chief Economist of the Reserve Bank of Australia, Hunter, emphasized the “good news” in terms of inflation expectations in today’s speech, as the Reserve Bank of Australia is currently not concerned about the unmooring of inflation expectations, which was a concern before. Hunter cited new research from the Reserve Bank of Australia, emphasizing that “short-term inflation expectations seem to be approaching (anchored) long-term expectations,” and that “there is no evidence that inflation expectations are more persistent than normal.” In our view, the Reserve Bank of Australia’s greater confidence in inflation expectations, on the one hand, further reduces the risk of a possible unexpected rise in the third quarter CPI to be announced on October 30, which could lead to another rate hike; on the other hand, this highlights the risk that our forecast for a loosening cycle starting in February 2025 may be brought forward to the end of 2024.