The focus in the week ahead is naturally on the critical election, which aptly overshadows the Reserve Bank’s interest rate meeting on the following day. At that meeting, we expect the Bank’s Monetary Policy Committee to keep the policy interest rate unchanged (premised on our assumption that the election will not trigger any material currency weakness that could ultimately be inflationary).
The discussion at this meeting will likely remain quite cautious about persistent upside risks to the inflation forecasts, emphasising the slow easing of inflation to the midpoint of the target range. We expect inflation to largely drift sideways in the second and third quarters of this year, before sustainably reaching the midpoint of the Bank’s 3-6% target from the fourth quarter. This still sets the scene for interest rate cuts from the third quarter of 2024, in our view, though this would, like in many other countries, be somewhat later than was widely expected initially, thus postpon...
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