Mortgage holders ready for relief after past rates blow
The Reserve Bank of Australia board, which meets on Monday and Tuesday, is widely tipped to shave 25 basis points off the official cash rate, taking the figure to 3.6 per cent.
Each 25 basis point cut to interest rates shaves about $90 off monthly repayments on a $600,000 mortgage, assuming banks pass on the reduction in full.
The cash rate was last at 3.6 per cent in April 2023.
A surprise jump in unemployment combined with inflation data within the RBA's target zone should make a cut on Tuesday almost inevitable, Westpac Group chief economist Luci Ellis said.
"Further cuts in November, February 2026 and May 2026 also look increasingly likely," she said.
"We think this is at the lower end of what could be regarded as neutral, and would reflect the RBA's response to a path for underlying inflation that turns out a little lower than what it forecast in May."
In a move that caught analysts and many mortgage holders off-guard, the central bank in July kept the cash rate steady at 3.85 per cent.
Most economists had pencilled in a 25 basis point cut on the back of slowing inflation.
The RBA board said maintaining price stability and full employment was the priority.
"The board judged that it could wait for a little more information to confirm that inflation remains on track to reach 2.5 per cent on a sustainable basis," the post-meeting statement read.
The latest quarterly inflation data showed the preferred figure of trimmed mean running at 2.7 per cent on an annual basis.
"That should be a pleasant surprise as the RBA had unofficially revised up its forecasts based on the April and May monthly CPI reports," CreditorWatch chief economist Ivan Colhoun said.
"(We) expect the RBA board to vote unanimously to deliver another interest rate cut … this will be welcome news for both consumers and businesses alike."
The jobless rate rose to 4.3 per cent, surpassing expectations, as the number of unemployed Australians jumped.
Financial markets expected the rate to remain steady at 4.1 per cent in June.
KPMG senior economist Terry Rawnsley said there was nothing in the various data points that should prevent a rate cut.
"Australia's labour market remains resilient, despite signs of moderation, with unemployment at 4.3 per cent, its highest level since late 2021, but still historically low … this has been critical in helping households navigate the cost-of-living crisis," he said.
"However, ongoing headwinds reinforce the need for interest rate cuts to sustain our labour market strength going forward."
Interest rate markets have almost fully priced in a 25 basis point cut to the official cash rate at the August meeting and project a fall to 3.2 per cent by the end of 2025.
Meanwhile, US stocks ended the week up with the technology-heavy Nasdaq reaching a record high and all three major indexes logging gains.
Australian share futures lifted five points to be up 0.05 per cent, setting up a positive start to trading on Monday after a drop on local markets on Friday.
The benchmark S&P/ASX200 index ground 24.3 points lower, falling 0.28 per cent to 8.807.1, while the broader All Ordinaries fell 25.4 points, or 0.28 per cent, to 9,076.6.
Australia's central bank appears set to offer mortgage holders some repayment relief a month on from its shock decision to keep interest rates on hold.
The Reserve Bank of Australia board, which meets on Monday and Tuesday, is widely tipped to shave 25 basis points off the official cash rate, taking the figure to 3.6 per cent.
Each 25 basis point cut to interest rates shaves about $90 off monthly repayments on a $600,000 mortgage, assuming banks pass on the reduction in full.
The cash rate was last at 3.6 per cent in April 2023.
A surprise jump in unemployment combined with inflation data within the RBA's target zone should make a cut on Tuesday almost inevitable, Westpac Group chief economist Luci Ellis said.
"Further cuts in November, February 2026 and May 2026 also look increasingly likely," she said.
"We think this is at the lower end of what could be regarded as neutral, and would reflect the RBA's response to a path for underlying inflation that turns out a little lower than what it forecast in May."
In a move that caught analysts and many mortgage holders off-guard, the central bank in July kept the cash rate steady at 3.85 per cent.
Most economists had pencilled in a 25 basis point cut on the back of slowing inflation.
The RBA board said maintaining price stability and full employment was the priority.
"The board judged that it could wait for a little more information to confirm that inflation remains on track to reach 2.5 per cent on a sustainable basis," the post-meeting statement read.
The latest quarterly inflation data showed the preferred figure of trimmed mean running at 2.7 per cent on an annual basis.
"That should be a pleasant surprise as the RBA had unofficially revised up its forecasts based on the April and May monthly CPI reports," CreditorWatch chief economist Ivan Colhoun said.
"(We) expect the RBA board to vote unanimously to deliver another interest rate cut … this will be welcome news for both consumers and businesses alike."
The jobless rate rose to 4.3 per cent, surpassing expectations, as the number of unemployed Australians jumped.
Financial markets expected the rate to remain steady at 4.1 per cent in June.
KPMG senior economist Terry Rawnsley said there was nothing in the various data points that should prevent a rate cut.
"Australia's labour market remains resilient, despite signs of moderation, with unemployment at 4.3 per cent, its highest level since late 2021, but still historically low … this has been critical in helping households navigate the cost-of-living crisis," he said.
"However, ongoing headwinds reinforce the need for interest rate cuts to sustain our labour market strength going forward."
Interest rate markets have almost fully priced in a 25 basis point cut to the official cash rate at the August meeting and project a fall to 3.2 per cent by the end of 2025.
Meanwhile, US stocks ended the week up with the technology-heavy Nasdaq reaching a record high and all three major indexes logging gains.
Australian share futures lifted five points to be up 0.05 per cent, setting up a positive start to trading on Monday after a drop on local markets on Friday.
The benchmark S&P/ASX200 index ground 24.3 points lower, falling 0.28 per cent to 8.807.1, while the broader All Ordinaries fell 25.4 points, or 0.28 per cent, to 9,076.6.
Australia's central bank appears set to offer mortgage holders some repayment relief a month on from its shock decision to keep interest rates on hold.
The Reserve Bank of Australia board, which meets on Monday and Tuesday, is widely tipped to shave 25 basis points off the official cash rate, taking the figure to 3.6 per cent.
Each 25 basis point cut to interest rates shaves about $90 off monthly repayments on a $600,000 mortgage, assuming banks pass on the reduction in full.
The cash rate was last at 3.6 per cent in April 2023.
A surprise jump in unemployment combined with inflation data within the RBA's target zone should make a cut on Tuesday almost inevitable, Westpac Group chief economist Luci Ellis said.
"Further cuts in November, February 2026 and May 2026 also look increasingly likely," she said.
"We think this is at the lower end of what could be regarded as neutral, and would reflect the RBA's response to a path for underlying inflation that turns out a little lower than what it forecast in May."
In a move that caught analysts and many mortgage holders off-guard, the central bank in July kept the cash rate steady at 3.85 per cent.
Most economists had pencilled in a 25 basis point cut on the back of slowing inflation.
The RBA board said maintaining price stability and full employment was the priority.
"The board judged that it could wait for a little more information to confirm that inflation remains on track to reach 2.5 per cent on a sustainable basis," the post-meeting statement read.
The latest quarterly inflation data showed the preferred figure of trimmed mean running at 2.7 per cent on an annual basis.
"That should be a pleasant surprise as the RBA had unofficially revised up its forecasts based on the April and May monthly CPI reports," CreditorWatch chief economist Ivan Colhoun said.
"(We) expect the RBA board to vote unanimously to deliver another interest rate cut … this will be welcome news for both consumers and businesses alike."
The jobless rate rose to 4.3 per cent, surpassing expectations, as the number of unemployed Australians jumped.
Financial markets expected the rate to remain steady at 4.1 per cent in June.
KPMG senior economist Terry Rawnsley said there was nothing in the various data points that should prevent a rate cut.
"Australia's labour market remains resilient, despite signs of moderation, with unemployment at 4.3 per cent, its highest level since late 2021, but still historically low … this has been critical in helping households navigate the cost-of-living crisis," he said.
"However, ongoing headwinds reinforce the need for interest rate cuts to sustain our labour market strength going forward."
Interest rate markets have almost fully priced in a 25 basis point cut to the official cash rate at the August meeting and project a fall to 3.2 per cent by the end of 2025.
Meanwhile, US stocks ended the week up with the technology-heavy Nasdaq reaching a record high and all three major indexes logging gains.
Australian share futures lifted five points to be up 0.05 per cent, setting up a positive start to trading on Monday after a drop on local markets on Friday.
The benchmark S&P/ASX200 index ground 24.3 points lower, falling 0.28 per cent to 8.807.1, while the broader All Ordinaries fell 25.4 points, or 0.28 per cent, to 9,076.6.
Australia's central bank appears set to offer mortgage holders some repayment relief a month on from its shock decision to keep interest rates on hold.
The Reserve Bank of Australia board, which meets on Monday and Tuesday, is widely tipped to shave 25 basis points off the official cash rate, taking the figure to 3.6 per cent.
Each 25 basis point cut to interest rates shaves about $90 off monthly repayments on a $600,000 mortgage, assuming banks pass on the reduction in full.
The cash rate was last at 3.6 per cent in April 2023.
A surprise jump in unemployment combined with inflation data within the RBA's target zone should make a cut on Tuesday almost inevitable, Westpac Group chief economist Luci Ellis said.
"Further cuts in November, February 2026 and May 2026 also look increasingly likely," she said.
"We think this is at the lower end of what could be regarded as neutral, and would reflect the RBA's response to a path for underlying inflation that turns out a little lower than what it forecast in May."
In a move that caught analysts and many mortgage holders off-guard, the central bank in July kept the cash rate steady at 3.85 per cent.
Most economists had pencilled in a 25 basis point cut on the back of slowing inflation.
The RBA board said maintaining price stability and full employment was the priority.
"The board judged that it could wait for a little more information to confirm that inflation remains on track to reach 2.5 per cent on a sustainable basis," the post-meeting statement read.
The latest quarterly inflation data showed the preferred figure of trimmed mean running at 2.7 per cent on an annual basis.
"That should be a pleasant surprise as the RBA had unofficially revised up its forecasts based on the April and May monthly CPI reports," CreditorWatch chief economist Ivan Colhoun said.
"(We) expect the RBA board to vote unanimously to deliver another interest rate cut … this will be welcome news for both consumers and businesses alike."
The jobless rate rose to 4.3 per cent, surpassing expectations, as the number of unemployed Australians jumped.
Financial markets expected the rate to remain steady at 4.1 per cent in June.
KPMG senior economist Terry Rawnsley said there was nothing in the various data points that should prevent a rate cut.
"Australia's labour market remains resilient, despite signs of moderation, with unemployment at 4.3 per cent, its highest level since late 2021, but still historically low … this has been critical in helping households navigate the cost-of-living crisis," he said.
"However, ongoing headwinds reinforce the need for interest rate cuts to sustain our labour market strength going forward."
Interest rate markets have almost fully priced in a 25 basis point cut to the official cash rate at the August meeting and project a fall to 3.2 per cent by the end of 2025.
Meanwhile, US stocks ended the week up with the technology-heavy Nasdaq reaching a record high and all three major indexes logging gains.
Australian share futures lifted five points to be up 0.05 per cent, setting up a positive start to trading on Monday after a drop on local markets on Friday.
The benchmark S&P/ASX200 index ground 24.3 points lower, falling 0.28 per cent to 8.807.1, while the broader All Ordinaries fell 25.4 points, or 0.28 per cent, to 9,076.6.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Perth Now
8 minutes ago
- Perth Now
Wall St dips as producer inflation data hits rate bets
Wall Street's main indexes have declined after a hotter-than-expected producer prices report dampened investor expectations of potential interest-rate cuts by the Federal Reserve this year. A Labor Department report showed the Producer Price Index rose 3.3 per cent on an annual basis in July, higher than the 2.5 per cent gain expected by economists polled by Reuters. On a monthly basis, it rose 0.9 per cent compared with an estimated 0.2 per cent rise. Traders lowered their Fed rate-cut expectations for the rest of the year to about 58 basis points, according to data compiled by LSEG, compared with about 63 bps before the report. But they are still fully pricing in a quarter-percentage-point cut in September. "It's sending a mixed message about the economy," said Peter Andersen, founder of Andersen Capital Management in Boston. "We have been too anxious to draw a conclusion that the economy is fine, it's not overheated. But this wholesale data does show that perhaps there is some inflation working and we shouldn't be so quick to conclude that we need to cut interest rates." In early trading on Thursdsay, the Dow Jones Industrial Average fell 164.29 points, or 0.37 per cent, to 44,757.98, the S&P 500 lost 16.84 points, or 0.26 per cent, to 6,449.74 and the Nasdaq Composite lost 22.69 points, or 0.10 per cent, to 21,690.45. Recent data reflecting labour market weakness and a moderate rise in consumer prices had strengthened expectations that the central bank will potentially lower interest rates next month. However, Thursday's report fanned concerns that US tariffs on imports could start to affect prices in the coming months and dampen a rally in US stocks that had helped the benchmark S&P 500 and tech-heavy Nasdaq log record highs over the past two sessions. On Thursday, nine of the 11 S&P 500 sectors declined, with materials, down 1.2 per cent, falling the most. Rate-sensitive small-caps and housing stocks also dropped more than 1.0 per cent each. Separate data showed the number of people in the US filing new applications for jobless benefits fell last week amid low lay-offs. A report also showed San Francisco Fed president Mary Daly pushed back against the need for a 50-basis-point interest rate cut next month, a day after Treasury Secretary Scott Bessent said an aggressive half-point cut was possible. Cisco Systems lost 1.0 per cent after the network equipment manufacturer's broadly in-line forecast did little to encourage investors. Deere & Co fell 8.0 per cent after the farm-equipment maker reported a lower quarterly profit and tightened its annual profit forecast while Tapestry plunged 17.6 per cent after the Coach handbag maker forecast annual profit below estimates. Both companies warned of tariffs affecting their business. Later in the day, investors will also tune into remarks from St Louis Fed President Alberto Musalem, a Federal Open Market Committee voting member this year. Declining issues outnumbered advancers by a 5.05-to-1 ratio on the NYSE and by a 3.38-to-1 ratio on the Nasdaq. The S&P 500 posted four new 52-week highs and no new lows while the Nasdaq Composite recorded 24 new highs and 31 new lows.
West Australian
6 hours ago
- West Australian
Secret Deloitte review into automated JobSeeker system warns of 'instability,' 'unintended impacts'
A $439,000 report kept under wraps by the government has issued urgent warnings over the system responsible for managing vulnerable Australians on JobSeeker, with fears the program punishes those struggling and is prone to error. The damning report comes after the Department of Employment and Workplace Relations (DEWR) and Services Australia were found to have illegally cancelled the JobSeeker payments of 964 recipients between April 2022 and July 2024. A review completed by Deloitte, which was received by DEWR on June 18 and remained unpublished until inquiries from NewsWire on Thursday, said repeated modifications and updates of the system had created at 'excessively convoluted' code base which 'lacks architectural integrity' had become 'difficult to manage. Commonwealth Ombudsman Iain Anderson said he feared it would have likely resulted in 'profound if not catastrophic' effects on Australians struggling financially. The mistaken terminations, which have been likened to robodebt 2.0, occurred after the controversial automated Targeted Compliance Framework (TCF) responsible for ensuring JobSeeker recipients met their mutual obligations repeatedly malfunctioned. A lack of a 'comprehensive design register' also meant any changes require 'extensive manual intervention across multiple databases and workflows,' resulting in a high 'likelihood of system instability and unintended impacts on participant case outcomes'. Additionally the Statement of Assurance said the TCF has 'not evolved or matured' since it was introduced under the Coalition government in 2018, and 'lacks the risk-based proportionality and participant centred design' found in similar programs used by the ATO, Australian Border Force and the NDIS. In another scathing finding, Deloitte, who were paid $439,142 to undertake the review, said other large government IT systems which weren't used by vulnerable Australians placed 'greater emphasis on human case management to respond to complex participant needs'. Criticisms were also made of the TCF's technical makeup. The report said the volatility of the program had been 'exacerbated by the widespread use of unconventional technical practices', like hard-coded fixes. However, the two out of three of the glitches which resulted in the nearly 1000 JobSeeker payment terminations were 'embedded during the original 2018 system'. Despite amendments passed in 2022, which called for greater discretion to be used before the cancelling of payments, Deloitte said there was 'no evidence' that the 'capacity for discretionary decision-making functionality was embedded in the system' ever. The review called on DEWR to limit or suspend further modifications to the system to 'constrain the risk of further disruptions,' and limit the introduction of new defects. If necessary, changes to comply with legislative updates should be 'thoroughly assessed by policy, legal and technical authorities to ensure legislative and policy compliance and anticipated outcomes are maintained'. DEWR must also urgently strengthen its current internal review processes to ensure negative case determinations are 'supported by appropriate evidence' and lawful under current legislation. Welfare advocates, like the Anti-Poverty Centre, the Australian Council of Social Services (ACOSS), and Economic Justice Australia have repeatedly criticised the use of the TCF, calling for the punitive measure to be removed. Mr Anderson, the Commonwealth Ombudsman also singled out DEWR secretary Natalie James had been so slow to act, taking 10 months April 2022 to September 2023 to pause the automated cancellations after it was raised by external legal advisers. As of March 21 this year, reductions and cancellations in income support payments have been paused pending ongoing legal and IT reviews, however suspensions have remained. The department has also yet to implement the Digital Protections Framework, despite legislative requirements passed in 2022, with Mr Anderson writing: 'We do not consider a delay of over three years, coupled with an indefinite commitment to future action, is reasonable'. Employment and Workplace Relations Minister Amanda Rishworth and the DEWR were contacted for comment.
Perth Now
6 hours ago
- Perth Now
‘Unstable' Jobseeker system dudding Aussies
A $439,000 report kept under wraps by the government has issued urgent warnings over the system responsible for managing vulnerable Australians on JobSeeker, with fears the program punishes those struggling and is prone to error. The damning report comes after the Department of Employment and Workplace Relations (DEWR) and Services Australia were found to have illegally cancelled the JobSeeker payments of 964 recipients between April 2022 and July 2024. A review completed by Deloitte, which was received by DEWR on June 18 and remained unpublished until inquiries from NewsWire on Thursday, said repeated modifications and updates of the system had created at 'excessively convoluted' code base which 'lacks architectural integrity' had become 'difficult to manage. Commonwealth Ombudsman Iain Anderson said he feared it would have likely resulted in 'profound if not catastrophic' effects on Australians struggling financially. The mistaken terminations, which have been likened to robodebt 2.0, occurred after the controversial automated Targeted Compliance Framework (TCF) responsible for ensuring JobSeeker recipients met their mutual obligations repeatedly malfunctioned. The controversial automated system responsible for ensuring JobSeeker recipients complied with their obligations has been found to be unstable and poorly maintained. NewsWire/ Emma Brasier Credit: News Corp Australia A lack of a 'comprehensive design register' also meant any changes require 'extensive manual intervention across multiple databases and workflows,' resulting in a high 'likelihood of system instability and unintended impacts on participant case outcomes'. Additionally the Statement of Assurance said the TCF has 'not evolved or matured' since it was introduced under the Coalition government in 2018, and 'lacks the risk-based proportionality and participant centred design' found in similar programs used by the ATO, Australian Border Force and the NDIS. In another scathing finding, Deloitte, who were paid $439,142 to undertake the review, said other large government IT systems which weren't used by vulnerable Australians placed 'greater emphasis on human case management to respond to complex participant needs'. Criticisms were also made of the TCF's technical makeup. The report said the volatility of the program had been 'exacerbated by the widespread use of unconventional technical practices', like hard-coded fixes. However, the two out of three of the glitches which resulted in the nearly 1000 JobSeeker payment terminations were 'embedded during the original 2018 system'. Despite amendments passed in 2022, which called for greater discretion to be used before the cancelling of payments, Deloitte said there was 'no evidence' that the 'capacity for discretionary decision-making functionality was embedded in the system' ever. The review called on DEWR to limit or suspend further modifications to the system to 'constrain the risk of further disruptions,' and limit the introduction of new defects. If necessary, changes to comply with legislative updates should be 'thoroughly assessed by policy, legal and technical authorities to ensure legislative and policy compliance and anticipated outcomes are maintained'. DEWR must also urgently strengthen its current internal review processes to ensure negative case determinations are 'supported by appropriate evidence' and lawful under current legislation. Welfare bodies including ACOSS have called for the removal of the punitive and malfunctioning TCF, which was responsible for the unlawful automated cancellations of 964 JobSeeker payments. NewsWire/ Martin Ollman Credit: News Corp Australia Welfare advocates, like the Anti-Poverty Centre, the Australian Council of Social Services (ACOSS), and Economic Justice Australia have repeatedly criticised the use of the TCF, calling for the punitive measure to be removed. Mr Anderson, the Commonwealth Ombudsman also singled out DEWR secretary Natalie James had been so slow to act, taking 10 months April 2022 to September 2023 to pause the automated cancellations after it was raised by external legal advisers. As of March 21 this year, reductions and cancellations in income support payments have been paused pending ongoing legal and IT reviews, however suspensions have remained. The department has also yet to implement the Digital Protections Framework, despite legislative requirements passed in 2022, with Mr Anderson writing: 'We do not consider a delay of over three years, coupled with an indefinite commitment to future action, is reasonable'. Employment and Workplace Relations Minister Amanda Rishworth and the DEWR were contacted for comment.
