UBS sees no RBA cuts until late 2027 as AI boom fuels inflation, growth slowing to 1.4%

On the inflation data front, a longer restrictive period would support rate differentials, but the feeble domestic growth forward view limits how much it can benefit for the Australian dollar, according to investingLive. According to UBS, the AI investment boom is adding to Australia's inflation problem before it delivers any productivity advances, and that looks set to keep the Reserve Bank of Australia's policy restrictive well into 2027.

Key points

• On growth, UBS anticipates Australia's economy to slow to around 1.4% in 2027, below most forecasts and marginally under the RBA's.
• The bank's chief economist for Australasia, George Tharenou, told ausbiz he does not anticipate rate reductions until late 2027 or 2028.
• The February RBA meeting is now a live risk if quarterly core inflation remains near a 1% pace.
• UBS is more upbeat about the world economy, forecasting global growth of around 3.5% in 2027.
• Yet outside the AI boom, Tharenou anticipates the private sector to be close to flat.

Inside the Inflation data story

The February RBA meeting is now a live risk if quarterly core inflation remains near a 1% pace. The bank's chief economist for Australasia, George Tharenou, told ausbiz he does not anticipate rate reductions until late 2027 or 2028. Tharenou noted a recent speech by RBA Assistant Governor Sarah Hunter (RBA's Hunter flags AI could trigger sharp asset repricing as boom adds to inflation ) revealed how seriously the central bank is taking the AI shock.

That puts UBS at odds with markets, which turned dovish following the RBA's last meeting and began pricing cuts within months. On growth, UBS anticipates Australia's economy to slow to around 1.4% in 2027, below most forecasts and marginally under the RBA's.

Yet outside the AI boom, Tharenou anticipates the private sector to be close to flat, with declining house prices weighing on consumers and unemployment advancing above 5%. UBS is more upbeat about the world economy, forecasting global growth of around 3.5% in 2027, above consensus.

Why traders are watching inflation data

Inflation figures decide how long central banks keep interest rates high. Hotter-than-expected readings usually lift bond yields and the local currency, while softer data raise hopes of rate cuts.

Price data feed straight into central-bank decisions, which makes them some of the most market-moving releases on the calendar for forex, bonds and stocks.

Market reaction and data

On the currency side, the latest ECB daily reference rates (2026-11-12) show EUR/USD 1.1081, GBP/USD 1.3256, AUD/USD 0.6821, NZD/USD 0.5556, USD/JPY 159.7, USD/CHF 0.8331, USD/CAD 1.4249, USD/CNY 6.6683. These are reference fixes, not live quotes.

What to watch next for inflation data

Next in focus are the coming inflation releases, central-bank reaction to them and changes in market pricing for future rate moves.

Key scheduled releases on the economic calendar:

• USD Core PPI m/m on Fri Nov 13, 13:30 UTC, forecast 0.3%, previous 0.7%
• USD PPI m/m on Fri Nov 13, 13:30 UTC, forecast 0.4%, previous 1.3%

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FAQ

What is the latest inflation data news?

A longer restrictive period would support rate differentials, but the feeble domestic growth forward view limits how much it can benefit for the Australian dollar.

Why do inflation numbers move markets?

Inflation data change expectations for central-bank interest rates, and rate expectations drive currencies, bond yields and stock valuations.

Where does this information come from?

This report is based on coverage from investingLive, checked against market data where available. It is a summary for information only and not investment advice.