Reserve Bank minutes in focus after shock rate decision
Australia's central bank shocked markets and disappointed borrowers earlier in July when it opted to keep the cash rate on hold at 3.85 per cent, defying expectations of a 25 basis point cut.
The RBA will on Tuesday release the minutes of its last board meeting, potentially offering a glimpse of what lies ahead for its next decision on August 12.
Weaker-than-expected jobs data has narrowed expectations of an interest rate cut next month, after unemployment rose from 4.1 per cent to 4.3 per cent in June, despite economists' expectations of a steady print.
The employment figures were released on Thursday and could render the minutes slightly outdated, and a greater focus will be on RBA governor Michele Bullock's speech at Sydney's Anika Foundation on Thursday.
Interest rate markets have almost fully priced-in a 25 basis point cut to the official cash rate at the August meeting, and project the rate will fall to 3.2 per cent by the end of the year.
Each 25 basis point cut to the cash rate would shave roughly $90 off monthly repayments on a $600,000 mortgage.
In further signs Australia's idling economy may need a boost, government spending continues to drive the bulk of new project activity, accounting for 80 per cent of new investment in the June quarter, a Deloitte Access Economics report shows.
The overall project pipeline continued to grow but state budgets suggest a transition to more cautious spending, the report found, with a focus on completing existing projects over announcing new ones.
While infrastructure spending helped economies recover from the COVID-19 pandemic, many governments now face higher debt levels, rising interest costs and project budget overruns, Deloitte associate director and lead author Sheraan Underwood said.
"Australia's infrastructure boom isn't over," he said.
"But with governments under growing fiscal pressure, stronger private sector investment will be key to supporting the next phase of economic growth."
The Reserve Bank is set to reveal why it resisted an interest rate cut, despite signs of easing inflation and sluggish economic growth.
Australia's central bank shocked markets and disappointed borrowers earlier in July when it opted to keep the cash rate on hold at 3.85 per cent, defying expectations of a 25 basis point cut.
The RBA will on Tuesday release the minutes of its last board meeting, potentially offering a glimpse of what lies ahead for its next decision on August 12.
Weaker-than-expected jobs data has narrowed expectations of an interest rate cut next month, after unemployment rose from 4.1 per cent to 4.3 per cent in June, despite economists' expectations of a steady print.
The employment figures were released on Thursday and could render the minutes slightly outdated, and a greater focus will be on RBA governor Michele Bullock's speech at Sydney's Anika Foundation on Thursday.
Interest rate markets have almost fully priced-in a 25 basis point cut to the official cash rate at the August meeting, and project the rate will fall to 3.2 per cent by the end of the year.
Each 25 basis point cut to the cash rate would shave roughly $90 off monthly repayments on a $600,000 mortgage.
In further signs Australia's idling economy may need a boost, government spending continues to drive the bulk of new project activity, accounting for 80 per cent of new investment in the June quarter, a Deloitte Access Economics report shows.
The overall project pipeline continued to grow but state budgets suggest a transition to more cautious spending, the report found, with a focus on completing existing projects over announcing new ones.
While infrastructure spending helped economies recover from the COVID-19 pandemic, many governments now face higher debt levels, rising interest costs and project budget overruns, Deloitte associate director and lead author Sheraan Underwood said.
"Australia's infrastructure boom isn't over," he said.
"But with governments under growing fiscal pressure, stronger private sector investment will be key to supporting the next phase of economic growth."
The Reserve Bank is set to reveal why it resisted an interest rate cut, despite signs of easing inflation and sluggish economic growth.
Australia's central bank shocked markets and disappointed borrowers earlier in July when it opted to keep the cash rate on hold at 3.85 per cent, defying expectations of a 25 basis point cut.
The RBA will on Tuesday release the minutes of its last board meeting, potentially offering a glimpse of what lies ahead for its next decision on August 12.
Weaker-than-expected jobs data has narrowed expectations of an interest rate cut next month, after unemployment rose from 4.1 per cent to 4.3 per cent in June, despite economists' expectations of a steady print.
The employment figures were released on Thursday and could render the minutes slightly outdated, and a greater focus will be on RBA governor Michele Bullock's speech at Sydney's Anika Foundation on Thursday.
Interest rate markets have almost fully priced-in a 25 basis point cut to the official cash rate at the August meeting, and project the rate will fall to 3.2 per cent by the end of the year.
Each 25 basis point cut to the cash rate would shave roughly $90 off monthly repayments on a $600,000 mortgage.
In further signs Australia's idling economy may need a boost, government spending continues to drive the bulk of new project activity, accounting for 80 per cent of new investment in the June quarter, a Deloitte Access Economics report shows.
The overall project pipeline continued to grow but state budgets suggest a transition to more cautious spending, the report found, with a focus on completing existing projects over announcing new ones.
While infrastructure spending helped economies recover from the COVID-19 pandemic, many governments now face higher debt levels, rising interest costs and project budget overruns, Deloitte associate director and lead author Sheraan Underwood said.
"Australia's infrastructure boom isn't over," he said.
"But with governments under growing fiscal pressure, stronger private sector investment will be key to supporting the next phase of economic growth."
The Reserve Bank is set to reveal why it resisted an interest rate cut, despite signs of easing inflation and sluggish economic growth.
Australia's central bank shocked markets and disappointed borrowers earlier in July when it opted to keep the cash rate on hold at 3.85 per cent, defying expectations of a 25 basis point cut.
The RBA will on Tuesday release the minutes of its last board meeting, potentially offering a glimpse of what lies ahead for its next decision on August 12.
Weaker-than-expected jobs data has narrowed expectations of an interest rate cut next month, after unemployment rose from 4.1 per cent to 4.3 per cent in June, despite economists' expectations of a steady print.
The employment figures were released on Thursday and could render the minutes slightly outdated, and a greater focus will be on RBA governor Michele Bullock's speech at Sydney's Anika Foundation on Thursday.
Interest rate markets have almost fully priced-in a 25 basis point cut to the official cash rate at the August meeting, and project the rate will fall to 3.2 per cent by the end of the year.
Each 25 basis point cut to the cash rate would shave roughly $90 off monthly repayments on a $600,000 mortgage.
In further signs Australia's idling economy may need a boost, government spending continues to drive the bulk of new project activity, accounting for 80 per cent of new investment in the June quarter, a Deloitte Access Economics report shows.
The overall project pipeline continued to grow but state budgets suggest a transition to more cautious spending, the report found, with a focus on completing existing projects over announcing new ones.
While infrastructure spending helped economies recover from the COVID-19 pandemic, many governments now face higher debt levels, rising interest costs and project budget overruns, Deloitte associate director and lead author Sheraan Underwood said.
"Australia's infrastructure boom isn't over," he said.
"But with governments under growing fiscal pressure, stronger private sector investment will be key to supporting the next phase of economic growth."
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Daily Telegraph
2 hours ago
- Daily Telegraph
Weekend auction wrap: Sydney family smashes neighbour's record
A home in Sydney's northwest has sold for a suburb record, smashing the price paid for a home owned by the neighbours – the previous highest price in the area. The property on Anthony Rd sold for $4.7 million, setting a new record for a house sale in West Ryde. The auction saw the sellers pcoket a price $300,000 above their $4.4 million reserve. It has come amid rising auction activity that suggests Sydney is due another round of stellar growth in home prices. Auction clearance rates have been above 70 per cent for weeks, with preliminary figures showing nearly three quarters of auctions last week produced a sale. Historically, this kind of success rate over successive weeks has coincided with widespread price rises. Pello Northern Suburbs sales agent Michael Dowling said the West Ryde auction was 'really competitive' with bidding starting at $3.8 million. 'The previous highest sale in West Ryde was the house next door, and that sold for $4.19 about two years ago,' he said. 'So we knew it was going to be better than that, but I didn't think it was going to be $510,000 better than that.' MORE: Aus worse off as RBA rate cut panic sets in Mr Dowling said the home sold to a mother and two sons moving from Cheltenham who wanted a more spacious home that was ready to move in to. 'A lot of people in our area want that move-in ready feel, rather than going through the hassle and the inconvenience of dealing with council,' he said. 'A lot of people just want that finished product now.' MORE: 'Pivotal moment': chance to buy in Sydney for half price Auction clearance rates above 70 per cent have historically correlated with rises in prices across the Sydney market as a whole. Ray White NSW head of auctions Dave McMahon said the first weekend of August saw a 25 per cent decrease in scheduled auctions from the week prior. 'The notable difference was that only half of them proceeded through the day,' he said. 'With stock levels low, agents have been more open to entertaining offers prior with circa 15-20 per cent selling before auction day. 'Despite lower auction numbers today, we continued to see spirited competition from buyers with an average of 5.8 registered and 3.6 actively bidding.' MORE: Where your luxury car can come to dinner 'The decision to move it in-room was brilliant,' Mr Hajjar said. 'It created a really warm environment for bidders.' The homes under the hammer on King Rd, Hornsby and Kooringal Ave, Thornlie sold for prices well over their respective reserves. The property on King Rd sold for $2.095 million, a price $195,000 over reserve, while 78 Kooringal Ave sold for $2.395 million, $295,000 above its reserve. Mr Hajjar said it was a 'hesitant start' to the bidding, before they 'heated up very quickly.' Fifty-six bids were placed for 78 Kooringal Ave and a staggering 117 bids were placed during the auction for 8 King Rd. MORE: Pub baron's lavish lifestyle while owing $1bn criticised Further out west, a family were reported to be delighted with the sale of their property in Hassall Grove. No. 33 Monica Ave sold over reserve for a price of $1.015 million, with bidding opening at $800,000. Sales agent Meshel Bahnam of Ray White United Group said there were 17 registered bidders, the most he has seen in 'well over 18 months'. 'People are trying to buy before rates change this month,' she said. 'In the end, local first home buyers who have been looking for six months bought the house. 'They are so happy as they keep missing out on auctions,' said Mr Banham. Mr Banham said it was a suburb record price for a three-bedroom, one-bathroom house on a 454 sqm block. Sellers Brooke, Alex and their three children were reported to be contemplating a move to Lake Macquarie for a lifestyle change. Other sales included the auction for 50 Iandra Street, Concord West, which sold to its first bidder, going for a price of $3.51 million. Horwood Nolan founder and director Ben Horwood said interest was strong in the lead up to the auction. 'We had three registered bidders, all who had shown strong interest throughout the campaign,' he said. Mr Horwood said the home's location mostly attracted interest from families. MORE: Aus worse off as RBA rate cut panic sets in
Sydney Morning Herald
2 hours ago
- Sydney Morning Herald
Australia is trying to build 1.2 million homes, but they're getting stuck
Some 30,000 potential homes have been approved but have not yet started construction, analysis has found, as construction times blow out and building costs remain high. There were a further 219,000 homes under construction in the March quarter, Cotality analysis of ABS figures shows, similar to the levels during the building boom of the 2010s – except that, this time, homes are taking longer to finish. Cotality head of research Eliza Owen warned that homes were being approved and then getting stuck. Building costs surged after the COVID-19 lockdowns and have not returned to pre-pandemic levels, while the average number of quarters taken to complete a new unit has risen from about six a decade ago to more than nine. Owen highlighted the federal government's target of delivering 1.2 million new homes over five years. The closest Australia came to delivering this many homes in a five-year period was in the five years to December 2019, when just over a million homes were completed. Owen noted that this was in a different context: the cash rate then was lower, units made up a larger share of approvals and investors – including foreign investors – were a larger share of demand. She added that this did not necessarily lead to good housing outcomes. Despite the supply, home ownership rates fell from 67.2 per cent in June 2014 to 66.2 per cent in June 2020. Some of these were new apartments in which defects were so rife that some new dwellings could not be lived in.
The Age
2 hours ago
- The Age
Australia is trying to build 1.2 million homes, but they're getting stuck
Some 30,000 potential homes have been approved but have not yet started construction, analysis has found, as construction times blow out and building costs remain high. There were a further 219,000 homes under construction in the March quarter, Cotality analysis of ABS figures shows, similar to the levels during the building boom of the 2010s – except that, this time, homes are taking longer to finish. Cotality head of research Eliza Owen warned that homes were being approved and then getting stuck. Building costs surged after the COVID-19 lockdowns and have not returned to pre-pandemic levels, while the average number of quarters taken to complete a new unit has risen from about six a decade ago to more than nine. Owen highlighted the federal government's target of delivering 1.2 million new homes over five years. The closest Australia came to delivering this many homes in a five-year period was in the five years to December 2019, when just over a million homes were completed. Owen noted that this was in a different context: the cash rate then was lower, units made up a larger share of approvals and investors – including foreign investors – were a larger share of demand. She added that this did not necessarily lead to good housing outcomes. Despite the supply, home ownership rates fell from 67.2 per cent in June 2014 to 66.2 per cent in June 2020. Some of these were new apartments in which defects were so rife that some new dwellings could not be lived in.
