The chief economist at Bendigo Bank, David Robertson, has cautioned Australian households against expecting a rate cut in 2024, doubling down on the bank's view that the RBA will begin cutting rates early next year.

“For the RBA to cut rates, they will need to be convinced high inflation is fully contained; and the latest monthly CPI figures unfortunately don’t help that perception,” said Robertson. “With both headline CPI and core inflation rising marginally in the April data, this uptick, together with the uncertainty of the impact of state and federal budgets, adds to a ‘rates on hold’ outlook."

Other advanced economies, such as the US, are also grappling with stubborn inflation, which is delaying easing cycles. However, the Bank of Canada and the European Central Bank cut rates last week, indicating that tightening cycles are generally behind us, even if easing cycles may be later and shallower as inflation takes longer to dissipate, Robertson explained.

“On the growth front, real GDP only rose 0.1 per cent in Q1, and annual growth slowed to just 1.1 per cent, the lowest year-on-year pace since 2020, while GDP per capita remained negative for the fifth consecutive quarter,” Robertson said.

According to the bank, growth is not expected to rebound in the second quarter, but from July, the Government’s stage three tax cuts will start to support household incomes. By the end of 2024, Robertson predicted inflation to be closer to 3 per cent, a level not seen since 2021, which he said will be less of a drag on the economy.

“The recent Federal Budget doubled down on commitments to work with states to build 1.2 million homes by 2029, but house prices continue to reflect demand exceeding supply with another 0.8 per cent added to dwelling prices in May, with big increases in Perth and Adelaide seen over the last three months," Robertson said.

On a final note, he pointed out that the Australian Dollar peaked around 67 cents last week but was unable to break higher. Meanwhile, he said "volatility across the markets appears to be building."