Latest news with #BrendanRynne
The Guardian
11 hours ago
- Business
- The Guardian
Falling inflation rate boosts chances of RBA interest rate cut and relief for mortgage holders
Australia's inflation rate has eased again, bolstering expectations the Reserve Bank will lower the cash rate next month and bring further reprieve for mortgage holders. The headline inflation rate was 2.1% in the 12 months to May, down sharply on the previous month's figure of 2.4%, according to consumer price index figures released on Wednesday. KPMG chief economist Brendan Rynne said there was a 'continued pattern of deflation across the Australian economy'. 'This could provide comfort to the Reserve Bank at its next meeting, knowing that any cut to the cash rate will occur in a stable inflationary environment,' Rynne said. Sign up for Guardian Australia's breaking news email Krishna Bhimavarapu, economist at State Street Global Advisors, said: 'We are convinced that the RBA needs to cut in July to safeguard growth as inflation is clearly out of their way now.' While the monthly result can be volatile and is viewed as less authoritative than quarterly figures, the steep fall has pushed inflation towards the bottom of the RBA's 2-3% target range. The RBA's preferred CPI measure, the 'trimmed mean' or underlying inflation rate that strips out volatile items and various government subsidies, decreased to 2.4% from 2.8%. Markets upped their bets on a rate cut after the data was released, with markets now indicating near consensus support for a quarter point cut on 8 July. In total, traders expect three more rate cuts this year. While further rate cuts will be welcomed by mortgage holders, any further reduction in borrowing rates is expected to fuel another surge in property prices, making homes more unaffordable for prospective buyers. Economists at the major banks still believe the RBA will wait until August to cut. ANZ economist Madeline Dunk said the July meeting would be a 'close call'. 'It's going to be a pretty tough decision and it really depends on how concerned the RBA is about what's been happening globally,' Dunk said. She said the disruption caused by the initial US tariff announcements had faded, giving economic activity a chance to stabilise.
Sky News AU
11 hours ago
- Business
- Sky News AU
July interest rate cut all but locked in after trimmed mean inflation plunges to 2.4 per cent in the 12 months to May
Inflation has fallen in the 12 months to May, effectively cementing an interest rate cut when the Reserve Bank of Australia next meets. New data from the Australian Bureau of Statistics showed headline inflation fell from 2.4 per cent to 2.1 per cent and exceeded expectations. Trimmed mean inflation – the middle 70 per cent of price changes core to the RBA's upcoming interest rate call – fell from 2.8 per cent to 2.4 per cent in May. This marks the lowest annual trimmed mean inflation since November 2021. Money markets were expecting headline inflation, which includes all items in the ABS' consumer price index, to come in at 2.3 per cent. The latest inflation data comes ahead of the central bank's upcoming cash rate call where it is tipped to deliver mortgage holders their third rate cut of the year. Prior to the release of Wednesday's inflation data, money markets were factoring in an 81.4 per cent chance of a cut. After the release of the data, the chances of a rate cut has grown to 85 per cent, while the chance of no cut has fall from 18 to 15 per cent. KPMG's chief economist Brendan Rynne said the latest data could provide comfort to the RBA at its next meeting. "From KPMG's perspective, a 0.25 per cent cut is warranted given the continued weakness in the private sector of the Australian economy," Mr Rynne said. "On top of that any increase in demand that comes about from a further drop in interest rates is unlikely to stoke the inflation genie in an unhelpful way." A rate cut in July will be the third from the RBA after it slashed rates in February and May. This followed the central bank holding the cash rate at 4.35 per cent for almost 18 months to stamp out post-pandemic inflation. The largest contributors to the annual price changes in May was food and non-alcoholic beverages (up 2.9 per cent), followed by housing (up two per cent) and alcohol and tobacco (up 5.9 per cent). The ABS' head of price statistics, Michelle Marquardt, noted that non-alcoholic beverages surged in May due to global factors impacting supply. 'Non-alcoholic beverage prices remain high, with coffee, tea and cocoa prices up by 8.3 per cent over the past 12 months,' Ms Marquardt said. 'Higher prices for coffee drove the rise with adverse weather conditions impacting major overseas coffee bean-growing areas.' Rents were up 4.5 per cent in the 12 months to May, marking the lowest annual growth in rental prices since December 2022, while new dwelling prices rose 0.8 per cent. Electricity prices fell 5.9 per cent in the 12 months to May. This was lower than the 6.5 per cent plunge electricity prices took in the 12 months to April due to the timing of government rebates. 'In Victoria, the impact of these rebates was lower in May than April due to the timing of payments,' Ms Marquardt said. 'Without the Commonwealth and State government rebates, electricity prices would have risen 2.0 per cent in the 12 months to May.'
Daily Mail
12 hours ago
- Business
- Daily Mail
Good news for Aussies with as inflation falls - here's what it could mean for your mortgage
Aussie home borrowers could get more relief next month with inflation falling to the lowest level in more than six months. The consumer price index for May fell to just 2.1 per cent - putting on the lower side of the Reserve Bank's two to three per cent target. It's also the lower monthly indicator of headline inflation since October 2024. KPMG chief economist Brendan Rynne said a moderation in inflationary pressures could see the Reserve Bank cut interest rates again in July, with economic growth still slow. 'This could provide comfort to the Reserve Bank at its next meeting, knowing that any cut to the cash rate will occur in a stable inflationary environment,' he said. In good news for those planning a winter break, holiday travel and accommodation costs increased by just 0.6 per cent over the year. Bread and cereal prices rose by just two per cent but fruit and vegetable prices were up 2.8 per cent, as the effects of ex-tropical cyclone Alfred continued to wane. Fuel price fell by 10 per cent over the year, but the Australian Bureau of Statistics data was compiled before Israel and the United States launched airstrikes on Iran.
Yahoo
6 days ago
- Business
- Yahoo
RBA urged to cut interest rates in weeks as unemployment 'blow out' fears escalate
An economist believes the Reserve Bank of Australia (RBA) could have even more reason to cut interest rates next month after employment data was released this week. While the unemployment rate remained steady at 4.1 per cent, 2,500 fewer Aussies were in a job in May compared with April. That followed two months of strong job growth, especially when 89,000 people joined the workforce in April alone. KPMG chief economist Brendan Rynne thinks this strengthens the chance homeowners will get another 0.25 basis point reduction in the cash rate in early July. "At some point - and the likelihood is it will be sooner rather than later - this run of positive outcomes is likely to stop, as non-market sector employment growth in aged care, health care and public sector services slows," he said. Westpac doubles RBA interest rate cut forecast in $350 call for homeowners Centrelink age pension changes coming into effect from July 1 $1,000 ATO school fees tax deduction that Aussies don't realise they can claim Rynne said the private sector won't be strong enough to cope if the public sector slows, and we could soon see unemployment figures "blowing out" in the future. The 2,500 fewer Aussies in a job was far below the 25,000 increase that was expected for May. However, the 4.1 per cent unemployment rate is still below the RBA's expectations of rising to 4.3 per cent this we've already had two rate cuts so far this year, further reductions could be needed as government spending reduces and the economy continues to lag. "This means that the upcoming RBA decision is increasingly important," Rynne said. "The contractionary cash rate settings have done their job from an inflation perspective, despite the likelihood of a bounce in headline inflation as government rebates drop off and recent oil price surges feed their way into the system. "[The] labour force data should be telling the RBA to get ahead of the curve and drop the cash rate by 25 basis points at the next meeting if it wants to balance its dual mandate obligations." The ASX's Rate Cut Tracker analyses market data to assess this very question. Since June 3, this tracker has ascribed an above 80 per cent chance, with three days even seeing an 89 per cent chance. However, June 19 saw that likelihood dip down to 78 per cent. NAB is the only of the Big Four banks predicting a rate cut could come after the RBA's July 7-8 meeting. Commonwealth Bank (CBA), ANZ, and Westpac all believe the next round of rate relief will arrive at the August meeting. CBA and ANZ have predicted only two more cuts remain in 2025 and early 2026. NAB has forecasted three, and Westpac recently doubled its prediction to four cuts. 'If Westpac's forecast comes to fruition and there are four more RBA cuts through to mid-next year, someone with a $600,000 loan could potentially see their monthly repayments drop by almost $350 a month," Canstar data insights director Sally Tindall said. 'This would be a huge relief for households under pressure; however, borrowers should remember this is a forecast, rather than a given." Economist and Yahoo Finance contributor Stephen Koukoulas is sticking to his prediction of a July rate cut. He said the overall unemployment rate had actually been fairly steady in recent months, but it was other factors that would likely see the Board provide more mortgage relief. "The economy is still very subdued, still very weak, and that's an important thing that the RBA is going to be considering," he said. "The global economic conditions and geopolitical issues are clearly negative for our economy."Error in retrieving data Sign in to access your portfolio Error in retrieving data
News.com.au
20-05-2025
- Business
- News.com.au
RBA tipped to cut interest rates by 25 basis points
KPMG Chief Economist Brendan Rynne has weighed in ahead of the Reserve Bank's anticipated interest rate decision, forecasting a 25 basis point cut. 'We generally think that it will only be a 0.25 per cent interest rate cut today," Mr Rynne told Sky News Australia. 'It really depends on whether they are particularly concerned about the state of the Australian economy in terms of the weakness that we've seen for quite some time now within the private side of the economy. 'If those concerns outweigh any future concerns they have about an uptick in inflation, then they could do a double jump, but our expectation is only a 25-basis point cut today.'
