(Bloomberg) -- Australian economists brought forward their forecasts for the start of the Reserve Bank’s easing cycle, reflecting slight downgrades to inflation estimates and aligning them with current money-market pricing.

The RBA will lower its cash rate by a quarter-percentage point to 4.1% in the third quarter, the median estimate in a survey of 32 economists showed Thursday, versus expectations a month earlier that it would begin easing in the final three months of the year. Traders are pricing a first rate cut in September.

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The revised outlook reflects a deceleration in inflation in Australia. Economists now see CPI hitting the top of the central bank’s 2-3% target in the fourth quarter, compared with a January forecast for the first three months of 2025.

The RBA raised its cash rate to a 12-year high of 4.35% in November to guard against a resurgence of price pressures. At this month’s meeting, the first of the year, Governor Michele Bullock said she still couldn’t rule out a further hike given services prices remain sticky. 

Still, with broader inflation cooling and unemployment rising to a two-year high in January, most economists reckon the bank’s next move is down.

Andrew Vogel, an economist at S&P Global, said slower-than-expected inflation at the end of 2023 had improved prospects for monetary easing coming sooner. 

“This has slightly improved the outlook for 2024 and into 2025, as inflation should continue easing and economic activity should reverse its easing trend as the year progresses,” he said.

--With assistance from Garfield Reynolds.

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