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Last week’s third quarter inflation data came back higher than forecast, the major bank’s chief executive has said, as interest rate predictions now point towards a November cash rate hike.
The Consumer Price Index (CPI) data released by the Australian Bureau of Statistics (ABS) last Wednesday (25 October) revealed a rise of 1.2 per cent in the September 2023 quarter, up 5.4 per cent annually, a result higher than economist and market expectations.
Speaking to 3AW host Neil Mitchell on 27 October, NAB chief executive Ross McEwan expressed that the inflation figures were “higher than anticipated”.
“We’d called 1.1, I think it was and it turned up at 1.2 and it turned up at the top of the grouping, so it was higher, but there are some factors running through there. You have got petrol coming through with oil prices going up,” Mr McEwan said.
“We still think by the end of next year we’ll be down to 3-odd per cent back again, by the end of 2024.”
Mr McEwan reiterated the major bank’s expectation of one more interest rate hike on the horizon, but said he was unsure that rise would come in November.
“I’m not too sure whether it’s Cup Day,” Mr McEwan stated.
“But ... we might end up with a Christmas one if we’re not careful. We think there’s one more left and we’ve been calling that for the last probably four or five months.”
The higher-than-anticipated inflation figures have spurred many bank economists to shift their interest rate expectations for November, with all the big four banks in agreeance that a rise of 0.25 per cent is among us.
This is despite Reserve Bank of Australia (RBA) governor Michele Bullock’s statements during the Senate economics legislation committee on 26 October, where the governor said that the board was unsure if the CPI data will affect inflation forecasts and monetary policy.
When asked by senator Andrew Bragg if the inflation data represented any “material change”, Ms Bullock responded that the RBA is “still analysing the number”.
“The print came out a little higher than we’d been forecasting at our August statement on monetary policy but it was pretty much where we thought it would come out, given the information we'd come into since then, particularly the monthly CPI indicator, so we thought it was going to be about where it came out,” Ms Bullock said.
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