RBA rate call extraordinaire Rory Robertson makes his last prediction
And as 32 of 36 professional market economists surveyed by The Australian Financial Review found out this week, it can be incredibly humbling. The RBA's shock decision to hold the cash rate totally wrong-footed most of these experts, leaving them scrambling to explain what happened.
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Perth Now
an hour ago
- Perth Now
Warning ‘nervous' RBA could hold rates
A big four bank is warning mortgage holders a 'nervous' RBA could hold interest rates again in August as it looks to kill off inflation. Westpac chief economist Luci Ellis says Tuesday's release of minutes of the Reserve Bank's July meeting and the governor's keynote speech on Thursday reaffirm a rate cut in August is not a lock. 'The monetary policy board clearly remains nervous about inflation and some members want to see actual data to support their expectation that it is still declining towards 2.5 per cent, the midpoint of the RBA's 2-3 per cent target range,' Ms Ellis wrote in an economic note on Friday. 'For this reason, we cannot lock in the cash rate cut in August just yet.' Despite warning a cut is not a guarantee, Ms Ellis did concede the most likely outcome was a rate reduction in August. Homeowners are warned a rate cut in August is not guaranteed. NewsWire / Nicholas Eagar Credit: NewsWire Traders have priced in an August rate cut as a near certainty and all 29 market economists surveyed by Bloomberg say the official cash rate will be reduced by 25 basis points. The market in total expects 75 basis points worth of cuts by March 2026, bringing the official cash rate down from 3.85 to 3.10 per cent. While economists have been factoring in falling inflation and rising unemployment as a sign to cut, Ms Ellis said they shouldn't be pricing it as a certainty. 'Monetary board members who are still nervous about supply constraints and tight labour markets will want to tread slowly,' Ms Ellis said. In her speech to the Anika Foundation on Thursday, RBA governor Michele Bullock said the board would take a measured and gradual approach to future rate cuts. Ms Bullock pointed out year-end trimmed mean – which shows the underlying inflation rate by stripping out the more volatile parts of the economy, including fuel and energy prices – came in at just under 3 per cent for the first time since 2021. 'The monthly CPI Indicator data, which are volatile, suggest that the fall may not be quite as much as we forecast back in May,' she said. 'We still think it will show inflation declining slowly towards 2.5 per cent, but we are looking for data to support this expectation.' ANZ also came out with a warning saying the next round of CPI data – to be released next Wednesday – could derail an interest rate cut. ANZ said there is a key quarterly inflation figure to watch. Christian Gilles / NewsWire Credit: News Corp Australia ANZ economists say the central bank will be comfortable cutting should the quarterly trimmed mean figures come in at 0.6 per cent or 2.7 per cent for the year. But if the number comes in at 0.8 per cent or higher or an annualised rate of 3 per cent they say a cut is unlikely. Ms Bullock also said the labour market remained tight and the uptick in unemployment from 4.1 to 4.3 per cent in June was not a surprise to the central bank. Asked if seeing the June unemployment figures, which came out after the RBA's board meeting, would have swayed the board's decision Ms Bullock said: 'I don't think so'. 'The monthly numbers pop up and down … Our quarterly forecast for the unemployment rate to drift up to 4.2 per cent in the June quarter is pretty much on the mark,' Ms Bullock said. Ms Bullock also said economists overreacted to the figure and it wasn't the 'shock' they were calling it. 'Some of the coverage of the latest data suggested this was a shock – but the outcome for the June quarter was in line with the forecast we released in May,' she said. She said the board wanted to see a gradual easing in labour market conditions, that has so far been most evident in fewer job vacancies, reductions in hours worked and declining rates of voluntary job switching.
News.com.au
3 hours ago
- News.com.au
‘Gosh this is a scam': House price sparks outrage as Sydney property hits new high
A house selling in Western Sydney for almost $2 million has sent fed-up Aussies into an absolute depressed frenzy. A four-bedroom, two-bathroom unassuming red-brick home in Merrylands sold for $1,980,000 in late July, and footage from the auction is going viral. 'Sydney's gone wild. This house just sold for almost $2 million,' the poster wrote, and the clip has already amassed over 200,000 views. The video showcased the front yard crowded with potential buyers, with over 14 registered bidders. The sight of people packed in like sardines, desperately trying to buy a standard-looking home for almost $2 million, really hit a nerve with Aussies. It is especially confronting when you consider the property sold for $660,000 in 2013. The value of the house has almost tripled in just over a decade. Someone called it 'ridiculous', another claimed it 'shouldn't be allowed', while someone else just wrote 'RIP Australia'. 'Our Aussie kids have no chance to buy. It is sad,' one mused. '$2 million for that? Holy hell,' another wrote. '$2 million for what? Not even worth $1 million,' someone else echoed. 'Gosh this is a scam in broad daylight,' another chimed in. It has been a brutal year for Sydney property market. The median house price has surged 2.6 per cent over the June quarter to hit a new record of $1.7 million. This is the biggest increase in two years and partly due to Reserve Bank of Australia cutting interest rates twice in 2025. The official cash rate is down 3.85 per cent and last month the rates held. Real estate agent Vicky Ruan, who sold the family home, told that she always knew the property would be popular with buyers. 'People are looking for a family home. It is close to transport, and also the shopping centre, and people love the location,' she said. Ms Ruan said the sale price wasn't what she expected. Initial market feedback for the property had been over $1 million, but 'mid $1s' – rather than almost $2 million. The agent conceded that the almost $2 million selling price isn't exactly the norm in the area, where the median house price is around $1.3 million. 'At the beginning, I didn't think it'd go at this price. I didn't expect it … but when it goes to market this is just market place.' The real estate agent said that, compared to the turnout they get for other auctions, there was 'quite a lot' of interest. 'There were 14 groups of buyers that were keen to buy it. The market is quite good,' she said. Ms Ruan noted that the vendors were 'very happy' with the price, especially because they were upsizing. 'They were so excited! The vendor is upsizing, and they'd already purchased another property,' she explained. Real estate agent Amir Jahan said the sale price of the property is just a perfect example of what is happening in Sydney right now. 'We are in Sydney – nothing surprises me anymore. A property sold in Mount Druitt last year for $2.3 million,' he said. 'If a house in Mount Druitt sells for that price. Why would I be surprised by Merrylands?' Mr Jahan said that 'prices are going crazy' right now and he feels sorry for people trying to crack into the market. 'The prices are getting higher and higher every day. People can't afford anything,' he said. The agent also pointed out that Merrylands is a really popular area for young families and a desirable suburb. 'Merrylands is a suburb where people aren't just buying because they like the property they're buying because they like the culture,' he said. He explained that he believes people are also are buying from a place of fear that interest rates will drop and prices will rise even more. 'They're scared and jump on it. They don't want to risk it selling for more a month later,' he explained. Mr Jahan said vendors are also becoming increasingly difficult because they won't budge from the prices they expect. 'Two or three years ago, vendors had the mindset they're going to sell, now people have a stricter mindset, and if they don't achieve the price, they won't sell,' he said. The agent argued that things have gotten so bad that if you're not spending a couple of million dollars, you're not getting a quality property. 'If you want a decent property in Sydney you're looking at least $2 million,' he said.
Sky News AU
14 hours ago
- Sky News AU
RBA backing 'gradual and modest' rate cuts, ANZ chief economist Richard Yetsenga declares after Michele Bullock's speech
Aussie mortgage holders waiting for a flurry of interest rate cuts could have their hopes dashed after Reserve Bank of Australia governor Michele Bullock stood firm on the central bank's controversial rate hold. Ms Bullock addressed the annual Anika Foundation event on Thursday where she said the RBA had expected the unemployment rate to rise in June and noted inflation was declining alongside its forecast. "Last week brought us the latest labour market data, which confirmed that the unemployment rate increased in the June quarter," Ms Bullock said. "Some of the coverage of the latest data suggested this was a shock, but the outcome for the June quarter was in line with the forecast we released in May.' The Australian Bureau of Statistics revealed unemployment jumped 0.2 per cent to 4.3 per cent in June, exceeding market expectations and leading some to question the recent hold. ANZ chief economist Richard Yetsenga was in attendance, and said the RBA governor would likely deliver near term rate relief, but this would not be the start of a cutting spree. 'You would say almost certainly we'll get a cash rate cut next month,' Mr Yetsenga told Business Now on the sidelines of the event. 'But the tone of the speech today I think was consistent with easing still being pretty gradual and modest. 'The market's pricing three, nearly four rate cuts. I don't think the speech was consistent today with that many.' Ms Bullock backed in the rationale behind the central bank's shock rate hold, telling reporters the call came down to 'timing' of inflation data. 'We expect trimmed mean inflation to fall a little further in the June quarter in year-ended terms,' the RBA governor said. 'However, the monthly CPI Indicator data, which are volatile, suggest that the fall may not be quite as much as we forecast back in May. 'We still think it will show inflation declining slowly towards 2.5 per cent, but we are looking for data to support this expectation. 'Encouragingly, as inflation has slowed, the labour market has eased only gradually and the unemployment rate is relatively low.' Every major bank predicts the RBA will cut rates in August and forecasts at least one other cut this year. Westpac predicts the RBA will drop rates four times up until 2026, bringing the cash rate down a full per cent, while CBA and ANZ forecast the cash rate to drop to 3.35 per cent by November. NAB is tipping three more cuts to bring the cash rate down to 3.1 per cent by February. The RBA held the cash rate at 3.85 per cent in July after cutting twice since the beginning of the year.
