Closing Bell 29th November: Australia’s CPI Eases to 4.9%, Fueling Optimism in Market and Interest Rate Outlook

Inflation Falls to 4.9% as Clothes, Supermarket Cost Pressures Ease

In October, annual inflation in Australia fell unexpectedly to 4.9% from 5.6%, driven by decreasing clothes prices and supermarket cost pressures. This reduction, lower than the anticipated 5.2%, is attributed to moderated consumer goods demand, according to the Australian Bureau of Statistics. The Reserve Bank of Australia (RBA) is expected to maintain the cash rate at 4.35% in its December meeting, with only an 11% market expectation of a rate hike. RBA Governor Michele Bullock emphasized the need for cautious further tightening to control inflation without excessively impacting the economy and increasing unemployment.

RBNZ Holds Cash Rate at 5.5%

The Reserve Bank of New Zealand (RBNZ) held its official cash rate at 5.5% in its November meeting, a decision aligned with market expectations. The RBNZ expressed confidence in the rate’s effectiveness in restraining demand, though it remains alert to persistent excess demand and core inflation levels. The central bank indicated a potential rate increase if inflationary pressures exceed forecasts. Analysts from Westpac noted comfort with an “on hold” stance due to signs of easing imported inflation.

Oil Extends Climb as OPEC+ Meeting Looms

Oil prices continued to rise ahead of an important OPEC+ meeting concerning supply policies for 2024. Brent crude approached $US82 per barrel, and West Texas Intermediate was below $US77, influenced by a weakening US dollar and expectations of the Federal Reserve ceasing rate hikes. The meeting’s focus includes resolving output quota disputes among some African OPEC+ members. Despite recent gains, oil is predicted to decline monthly due to increased non-OPEC supply, putting pressure on OPEC+ to potentially enact deeper output cuts. The International Energy Agency forecasts a global crude surplus next year.