November 21, 2023

The Forward View – Australia: November 2023

Growth outlook upgraded but 4.6% rate peak ahead

Our podcast series continues with the NAB Forward View – Australia, giving you a 10 minute summary of our key forecasts this month.  To listen, just click the link below.

If listening on a mobile device, click listen in browser.


  • We have reviewed our forecasts for incoming data over recent months and nudged up our expectations for growth, lowered our peak unemployment rate to 4.5% and pushed up our inflation track in the near term.
  • Alongside these forecast revisions, we now expect one further increase in the cash rate to a peak of 4.6% in early 2024. We then see rates on hold until around November 2024 (previously August), before the RBA begins easing policy back towards neutral.
  • GDP is expected to grow by 1.4% in 2023 and 1.7% in 2024 – stronger than we expected 6 months ago – but still below trend. Household consumption will remain subdued, but growth is likely to remain positive. Elsewhere, dwelling investment is expected to fall in the near term, while business investment is broadly neutral over the next year or so.
  • The labour market has also remained resilient, but we still expect some further slowing in labour demand to see the unemployment rate rising to around 4.5% by late 2024.
  • This will see wage growth peak at around 4% – its strongest rate since 2009. We see 4% on the WPI as the threshold of comfort for the RBA in returning inflation back to the target band.
  • We now see trimmed mean inflation ending 2023 around 4.5%, easing to 3.3% by end 2024 and tracking within the upper half of the RBA’s target band by mid- 2025.
  • With that set of forecasts we see any further moves on the cash rate as fine-tuning rather than the RBA needing to take the cash rate materially higher. There is still some impact of prior tightening to flow through, and we are well past the peak in inflation. From here, it is about the desired timeframe of the RBA to return inflation to target.
  • For inflation, domestic cost pressures including labour costs and overheads (including energy costs and rents) will be increasingly important, as will the strength in overall consumer demand. Though services inflation is high, we see it easing as the impact of rates flows through, that said the rents component of the CPI is expected to remain strong but disinflation or even deflation in new building costs will be a key swing factor.

For further details, please see The Forward View Australia (November 2023)