Bloxham said there was a risk of a further drop depending on the RBA’s interest rate path. “That is a powerful transmission to slow down the economy and they might not be prepared to tolerate higher inflation,” he said in a panel discussion hosted by S.&P Global Ratings on Thursday.
Other data released on Thursday showed new home loans fell 8.5 percent in July, beating economists’ forecasts for a 3.5 percent drop. The value of new loan commitments to owner-occupiers fell 7 percent, while new loan commitments to investors sank 11.2 percent.
Figures on business spending, released by the Australian Bureau of Statistics on Thursday, were more mixed, with overall private investment falling 0.3 percent in the June quarter, below forecasts for an increase. of 1 percent. The buildings and structures category also fell, but spending on equipment, plant and machinery, which contributes to GDP, rose 2.1 percent.
“It suggests a marginally positive contribution to growth,” said Tapas Strickland, head of economics and markets at NAB. The bank expects the economy to grow 0.7 percent in the June quarter, compared to the same period last year. GDP data will be released on September 7, the day after the RBA rate decision.
The data also showed that investment plans for 2022-23 proved resilient despite headwinds both at home and abroad. Spending intentions were revised up to $146 billion, an increase of 11.7% from the last estimate, according to Diana Mousina, senior economist at AMP Capital.
“This is a larger-than-usual update and means total business investment is expected to rise 15 percent in 2022-23 after a 13 percent increase last year,” it said.
“These spending estimates, if realized, would imply a decent increase in business investment over the next year.”
The Australian dollar fell below 68¢, the lowest level in six weeks, before stabilizing at 68.30¢. It fell 2 percent in August on fears that higher borrowing costs will push the global economy into recession.
RBC Capital Markets forecasts that the RBA will raise interest rates by 0.5 percentage point next week and 0.25 percentage point in October and November, taking the cash rate to 2.85 percent.
CBA also expects a 0.5 percentage point increase next week in what could be the central bank’s last big move. There was a risk that the RBA could signal a slower pace of tightening in the future, he said.
Goldman Sachs announces two consecutive increases of 0.5 percentage points in September and October, and a terminal rate of 3.35 percent achieved by Christmas.