Australia’s Economy Picks Up, Supporting RBA’s Hawkish Tone
Australia’s economy picked up in the final three months of last year, supporting the central bank’s cautious approach to further policy easing even after it cut interest rates last month.
Gross domestic product expanded 0.6% in the fourth quarter of 2024, in line with economists’ estimates and double the pace of the previous three months, official data showed Wednesday. In per capita terms, GDP rose 0.1% after seven straight quarters of decline.
From a year earlier, the economy grew 1.3%, also in line with forecasts. “Moderate growth was seen broadly across the economy this quarter,” said Katherine Keenan, head of national accounts at the ABS. “Both public and private spending contributed to growth, supported by rising exports of goods and services.”
The RBA cut its cash rate by 25 basis points to 4.1% last month, citing growing confidence that inflation was returning to target. But the RBA also forecast economic growth to pick up this year to 2.4% in December, and that, along with “persistent labor market tightness” in the labor market, raises the risk of a rise in consumer prices.
The figures will be welcomed by Australia’s center-left Labor government, which is trailing the Liberal-National opposition coalition ahead of a mid-May general election.
Source: Bloomberg
