QIC chief economist Matthew Peter said the reason for the lift from its current level around US64.5 cents was because of the expected fall in the US dollar.

Peter said it had nothing to do with domestic data and everything to do with the US economy where the markets were expecting the Fed rate to fall by 100 basis points.

“Those rate differential between the US and us as they decline, pressure will build on the Aussie dollar which should push towards US70 cents over 2024.

“That appreciation which reduces the cost of imported goods, particularly those imported goods that are denominated in US dollars like oil.

“That will take some of the heat out of domestic inflation and it will mean the Reserve Bank will be able to stay on hold.”

He said QIC had been expecting a fall in US inflation to continue over 2024 and for the interest rate gap to narrow.

“The domestic and international data seems to be panning out in line with our expectations. So far, so good.”

After the recent hike in wages, QIC expects a slowdown next year with rises of only 1 per cent a quarter.

The Commonwealth Bank’s Gareth Aird said he expected the Reserve Bank would remain on hold in December and at its next meeting in February, if inflation remains subdued.

He said the December meeting of the RBA board was not considered “live” after wages data in line with expectations.

“The RBA has a hiking bias, but they are almost certain to leave the cash rate on hold at the December board meeting, following the 25 basis point rate increase in November,” Aird said.

“The RBA will almost certainly leave the cash rate on hold in February if core inflation prints at or below their forecast,” Aird said.