Bendigo Bank has released its September Economic Update, with the bank's Chief Economist, David Robertson, pointing to weak economic growth in Australia.

The report suggests that a rate cut is not expected until 2025, leaving Australia trailing behind in the global trend of easing monetary policy. Despite the Bank of England and the Reserve Bank of New Zealand initiating their easing cycles last month, Robertson states, "Australia remains at the back of the queue".

The update also highlights that Australia's headline CPI rate is expected to continue its steady decline throughout the financial year, due to electricity rebates and base effects. The country remains in a per capita recession, with household spending continuing to decline. However, Robertson predicts a reversal in the decline of economic growth, household consumption, and disposable income in the coming months.

"Recent GDP data was as forecast and was our 11th consecutive quarter of growth, but 1% is the slowest growth rate (outside the pandemic) since the ’91 recession, and as a result, we remain in a per capita recession", Robertson said. "Fortunately, recent consumer data is likely to mark the low ebb for household consumption and disposable income, which is forecast to pick up steadily this quarter thanks to the stage 3 tax cuts and electricity rebates, and as inflation becomes less of a drag on incomes".

Despite a recent uptick in unemployment to 4.2%, the jobs market remains relatively strong. However, any sudden loosening in labour markets or market dislocation on financial markets could influence the Reserve Bank's timeline for rate cuts. "As for when lower interest rates also add to household income, we continue to forecast rate cuts in 2025, with February or May the most likely months for relief, depending on quarterly inflation data - but there are two other variables to keep an eye on", Robertson said.

Residential property prices continue to trend higher, especially in regions where the supply of new dwellings is constrained. However, this financial year should see more moderate increases in property values, broadly matching inflation. "In short, economic growth and household incomes are forecast to gradually recover from here, but rate cuts in Australia still look more likely to occur next year, ultimately taking us back to a more neutral setting about 1% below where we are today", Robertson said.