Summary

Peter Redward noted that the Australian Reserve Bank rate is expected to be maintained at 435 basis points, with a shift to a more neutral stance anticipated by 2H 24. There's a possibility of a downward revision to the inflation forecast in the upcoming monetary policy statement. Labor market dynamics suggest an increase in the unemployment rate to 4.8% by the end of the current year with employment growth expected to cool to 1.6%, adding ~230,000 jobs. Despite weaknesses in household spending and residential investment, GDP growth is expected to slow modestly to 1.7%. Peter sees the Australian dollar a undervalued by 6-7% and also sees opportunities in buying three-year Commonwealth bonds. His short-term models are against the US and New Zealand dollars.

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