Latest news with #Bassanese
West Australian
6 days ago
- Business
- West Australian
Experts back Melbourne Cup day for next RBA rate cut
Mortgage holders will get further rate relief in 2025, with most experts betting on a rate cut on Melbourne Cup day following quarterly inflation data. The central bank is widely tipped to cut interest rates again this year after the cash rate dropped for the third time on Tuesday to 3.60 per cent. Tuesday's interest rate decision by the Reserve Bak board was unanimous and in line with previous comments where the central bank said future rate cuts were just about timing. The cut is the third in the cycle, after rate cuts in February and May, and follows the bank's shock decision to keep the cash rate on hold in July. Following the August rate cut, experts quickly forecast more interest rate relief, although the market is not banking on back-to-back rate cuts. Betashare chief economist David Bassanese said more interest rate cuts were coming on quarterly data, with inflation falling towards the midpoint of the 2 to 3 per cent target. 'That said, barring a major growth scare, the RBA does not seem in any rush to cut interest rates,' Mr Bassanese said. 'All up, my base case remains that a rate cut on Melbourne Cup day is an odds-on favourite – following release of the June quarter consumer price index report in late October. 'If the CPI report confirms annual underlying inflation has fallen to at least 2.6 per cent (the RBA's current expectation) – as I expect – then I fully anticipate the RBA will cut rates to 3.35 per cent on Melbourne Cup Day, Tuesday November 4.' AMP chief economist Shane Oliver said the RBA would continue to cut interest rates on the back of risks to higher unemployment and inflation subsiding. 'So, while low unemployment and poor productivity growth mean that the RBA will remain cautious and gradual in cutting rates, and they will assess the situation from meeting to meeting, we continue to see the RBA cutting rates again in November, February and May, taking the cash rate down to 2.85 per cent,' he said. In her press conference post announcing a rate cut in August, RBA governor Michele Bullock confirmed that further interest rate cuts were coming but said the bank would remain data dependent. 'You'll note that in the forecasts, we have inflation coming back down to target, and the unemployment rate remaining where it is with a couple more cash rate cuts in there – that's the best sort of guess,' she said. 'But things can change, and the board has to be taking things meeting by meeting and absorbing the data and thinking about what that might mean for whether or not we're on track to achieve our goals.'
ABC News
28-05-2025
- Business
- ABC News
Headline inflation steady at 2.4pc in April while RBA's preferred measure edges up, but odds still on July cut
Consumer prices rose 2.4 per cent for the year to April, according to the Australian Bureau of Statistics, leaving the inflation rate unchanged last month. It is the third month in a row that headline inflation has been steady. The market had expected a slight easing of inflation in April, to 2.3 per cent. The Reserve Bank's preferred measure of underlying, the trimmed mean, rose from 2.7 per cent over the year to March, to 2.8 per cent in April. Both measures remain firmly within the central bank's 2 to 3 per cent target band, however the monthly data is more volatile than the quarterly consumer price index (CPI), which will next be released on July 30, which is after the RBA next meets. The hotter-than-expected inflation figures mean the Reserve Bank may hold off cutting rates at its next meeting in July, according to some economists. Last week, the RBA's quarterly statement on monetary policy forecast annual trimmed mean inflation would fall to 2.6 per cent in the June quarter. "That's still quite possible, but today's April result has modestly heightened the chances of a greater than 2.6 per cent outcome [for the June quarter] — which could even see the RBA delay cutting rates in August all together," Mr Bassanese said. However, he noted that it would be "premature to give up on RBA rate cuts this year", maintaining his forecast for at least two further cuts this year. Market pricing still puts the probability of an 0.25 percentage point rate cut on July 8 at around 65 per cent. "With underlying price pressures proving somewhat persistent, we don't think the RBA will cut rates as far as the markets are anticipating," Capital Economics senior economist of the Asia Pacific Abhijit Surya wrote. The biggest contributors to the annual movement in prices were food and non-alcoholic beverages (up 3.1 per cent), housing (up 2.2 per cent) and recreation and culture (up 3.6 per cent). "While annual inflation eased for most food categories in April, egg prices were up 18.6 per cent in the past 12 months. "This comes as supply has been affected by bird flu outbreaks," ABS head of price statistics Michelle Marquardt said. Holiday travel and accommodation inflation jumped from 3.9 per cent to 5.3 per cent, due to high demand around the Easter and ANZAC day holidays. Health insurance inflation has also increased due to annual premium increases. Electricity prices fell 6.5 per cent, as government subsidies continued to flow through. "Without all the commonwealth and state government rebates, electricity prices would have risen 1.5 per cent in the 12 months to April," said Ms Marquardt.
The Age
19-05-2025
- Business
- The Age
ASX breaks winning streak as investors await RBA rate cut
Domino's pizza shares dropped 2.6 per cent after the surprise resignation of its chief executive after nine months in the job. Less than one year ago, shares were valued at $39.35 per share – they are now $24.55. Miners BHP (down 2.4 per cent), Fortescue (down 4.9 per cent) and Rio Tinto (down 1.3 per cent) suffered losses after a fall in iron ore prices. Mineral Resources (down 8.8 per cent) slumped as it unveiled its new chair, Malcolm Bundey, who will take over from James McClements on July 1. The price of oil fell, which weighed down the energy sector, with Woodside (down 1.5 per cent) Santos (down 1.7 per cent) and Yancoal (2 per cent) among worst performers. Commonwealth Bank (up 1 per cent) bucked the trend in the banking sector, closing at $171.36, while ANZ (down 1.7 per cent), NAB (down 0.5 per cent) and Macquarie Group (down 1.6 per cent) all lost ground. The lowdown David Bassanese, chief economist at BetaShares ETFs, said it was hard to pinpoint what drove the changes in the market but speculated there could be some 'nagging doubt' that the RBA would cut rates tomorrow. 'It [a rate cute] is almost a virtual certainty, priced into the market,' said Bassanese. 'Maybe just some concern that there's a nagging doubt that the RBA may not cut rates tomorrow.' Big-four banks are predicting a rate cut, which the RBA will announce on Tuesday afternoon. It is expected to lower the cash rate by 0.25 percentage points. HSBC chief economist Paul Bloxham said it was obvious a rate cut was needed, but the cautious approach of the RBA made it hard to predict. 'The RBA's patient approach to dealing with the post-pandemic inflation surge has paid off,' said Bloxham. 'Core inflation has fallen back into the RBA's target band without a recession or large retrenchment of the jobs market.' If not for the concern regarding a rate cut, the day's losses could be the result of some profit-taking after a stretch of positive closes on the ASX, Bassanese said. Loading Bassanese also said credit ratings agency Moody's decision to downgrade the United States' AAA credit rating – combined with deepening concern that growing debt will damage America's standing as the choice destination for global capital – may have affected the slide. The Moody's downgrade caused US Treasury yields to move higher, increased appetite for haven assets and boosted gold after its biggest weekly decline in six months. The one-notch cut from Moody's comes more than a year after Moody's changed its outlook on the US rating to negative. The credit assessor now has a stable outlook. 'While we recognise the US' significant economic and financial strengths, we believe these no longer fully counterbalance the decline in fiscal metrics,' Moody's wrote in a statement. Tweet of the day Quote of the day 'We'll get the first of the Productivity Commission's reports today on things we can do to improve our ... productivity. Well, let's hope something comes of it. I'll believe it when I see it.' – Economics editor Ross Gittins examining how to grow productivity.
The Guardian
26-03-2025
- Business
- The Guardian
Australia's easing inflation rate a boost for mortgage holders eyeing next rate cut – and Labor's election hopes
Australia's inflation rate has eased again, in data that will buoy Labor heading into an election and raise hopes for mortgage holders another interest rate cut is not far off. The headline inflation rate was 2.4% in the 12 months to February, a slight decrease on the previous month's figure, according to consumer price index figures released on Wednesday. Crucially, the Reserve Bank of Australia's preferred measure for inflation, the 'trimmed mean' or underlying inflation that strips out volatile items and various government subsidies, fell to 2.7% from 2.8%. While most economists do not expect the RBA to reduce rates at its meeting next week, the reduction means a surprise cut is not completely off the table for 1 April, the last decision before the election. The prevailing view, however, is that a cash rate cut in May, which would fall just after an election, is more likely. Sign up for Guardian Australia's breaking news email The chief economist at Betashares, David Bassanese, said the fresh CPI figures may 'open scope' for a cut in May. 'My base case is cuts in May and August,' Bassanese said. The drop in the inflation rate is a positive development for the Labor government ahead of an election expected to be fought over competing cost-of-living policies. The CPI data shows that the relentless increase in rental prices have eased, as have prices for new homes. The Australian Bureau of Statistics data also shows that electricity prices are falling, aided by government rebates. The treasurer, Jim Chalmers, said on Wednesday the data represented 'more positive and promising news' in the fight against inflation. 'We know that these monthly numbers are volatile and can bounce around but the direction of travel on inflation is clear,' Chalmers said. The government's budget papers, released on Tuesday, suggest Australia is 'increasingly likely' to come out of the inflationary period with a soft economic landing, rather than a thud. Sign up to Breaking News Australia Get the most important news as it breaks after newsletter promotion The RBA has consistently signalled that it 'was not yet assured' inflation could be returned to the target range with a lower cash rate, dampening expectations of further cuts. But the central bank has also acknowledged there's a danger in keeping rates elevated for too long. While central bankers are concerned cutting rates too early could trigger another bout of inflation, keeping rates elevated risks squeezing the economy, leading to unnecessary household pain and job losses. The US's tariff regime is also expected to weigh on the global economy, making it more likely that some central banks will need to cut rates to stimulate growth. The RBA is looking for the trimmed mean to keep moving to the midpoint of its 2% to 3% band. Most economists have pencilled in between one and three cuts for 2025, in addition to the RBA's decision last month to decrease the cash rate by a quarter point to 4.1%. Changes in the official cash rate flow through to borrowing and savings rates, including mortgages and deposit accounts. AMP economist My Bui said on Wednesday the RBA will need to be 'increasingly mindful' of the negative impacts of a global trade war on the Australian economy. 'We believe the next rate cut would be in May, following the release of the comprehensive tariff reviews from the US and the full quarterly inflation figures for Australia,' Bui said.
The Guardian
28-01-2025
- Business
- The Guardian
Inflation figures to ‘make or break' the case for an Australian pre-election February rate cut
Inflation figures due out on Wednesday could 'make or break' the case for a pre-election rate cut next month, according to economists, in one of the most politically consequential set of numbers of recent times. The market is pricing in an 84% chance of a 25 basis-point rate cut when the Reserve Bank of Australia (RBA) meets mid-next month, although those odds will rise or fall based on the December quarterly consumer price index. While the RBA has forecast for the trimmed mean (an underlying inflation rate that strips out volatile price swings) to come in at 3.4%, recent monthly data suggests the quarterly figures could come in lower. The chief economist at Betashares, David Bassanese, said a 3.2% result would 'cement' the case for a rate cut, 3.3% would make it a 'line-ball' decision and 3.4% would probably mean no rate cut in February. 'It will make or break the decision,' said Bassanese, who has forecast a rate cut-cementing 3.2% reading on Wednesday. 'A rate cut would help lift the squeeze on households and mortgage holders would obviously directly benefit. 'A cut could also psychologically lift some of the caution around households and just be seen as a vote of confidence in the economy.' Sign up for Guardian Australia's breaking news email The official cash rate has sat at an elevated 4.35% since November 2023, while the last rate cut occurred in November 2020 as part of a policy to stimulate a pandemic-stricken economy. The treasurer, Jim Chalmers, said on Tuesday he was confident 2025 would be better economically for Australians after grappling with rising cost-of-living pressures last year. 'We are making progress on inflation. We have got those real wages growing, we have kept the jobs market in really quite extraordinary conditions, so all of those things will flow through into some of the other indicators,' he told ABC radio on Tuesday. 'We expect growth in our economy to pick up a little bit, not a lot, but a little bit, and that will be a good thing.' Sign up to Breaking News Australia Get the most important news as it breaks after newsletter promotion Polling is tight before Australia's election, due by May, with unofficial campaigning under way. While most incumbent governments that faced voters last year lost power, those that won unveiled aggressive policies designed to alleviate cost-of-living pressures. The market expects the RBA to start cutting the cash rate before the trimmed mean drops into its target 2% to 3% band, provided the central bank is confident of a decelerating trend. The ASX tracks market expectations of a change in interest rates through the pricing of cash rate contracts. The rate tracker lists a 16% chance of 'no change' in February, a view supported by robust employment data that recently created uncertainty over whether the labour market required stimulus. The headline inflation rate, which includes government rebated-electricity bills, last registered at an annual 2.8% rate at the September quarter release. With AAP
