Latest news with #CarlAng
CNBC
20-05-2025
- Business
- CNBC
Australia cuts policy rate to 2-year low as inflation concerns continue to recede
Australia's central bank cut its policy rate by 25 basis points to the lowest in two years as inflation concerns in the country continue to recede, giving room for the bank to ease monetary policy. The Reserve Bank of Australia cut the benchmark rate to 3.85%, its lowest level since May 2023, in line with expectations from economists polled by Reuters. Australia's inflation has been on a downtrend, with the most recent headline inflation figure coming in at a four-year low of 2.4% in the first quarter of 2025. The RBA said in its previous monetary policy statement that returning inflation sustainably to its target of between 2% and 3% "within a reasonable timeframe" is its highest priority, although it also acknowledged that the outlook was uncertain. The Australian economy has also seen somewhat of a turnaround, with the most recent GDP reading showing a 1.3% year-on-year expansion in the fourth quarter and marking its first expansion since September 2023. However, analysts, ahead of the RBA meeting, have highlighted downside risks for the Australian economy due to global trade tensions and uncertainty around the domestic economy. In a May 16 note, HSBC analysts noted that "the global economy and financial markets have had tumultuous times" since the RBA's last meeting on April 1, including the imposition — and subsequent suspension — of U.S. President Donald Trump's "Liberation Day" analysts forecasted a "modest negative growth impact" on the country, and said that the market shocks are likely slightly disinflationary for Australia. This is due to weaker expected global growth and trade diversion of manufactured goods from China into non-U.S. markets, including Australia. Carl Ang, Fixed Income Research Analyst at MFS Investment Management, also noted in a May 15 note that downside risks and uncertainty around Australia's economic outlook have increased substantially, due to "Liberation Day" and global trade policies. This will likely prompt a "tangibly dovish pivot from the RBA," he said, forecasting that the central bank will reach a terminal rate of 3.1% in early 2026.
Daily Mail
16-05-2025
- Business
- Daily Mail
Commonwealth Bank issue good news for millions of Australians with a mortgage
Australians with an average mortgage are set to save $100 a month on their repayments following an expected interest rate cut next week. Most economists are expecting the Reserve Bank of Australia to cut the cash rate by another 25 basis points, from 4.1 per cent now to 3.85 per cent, at its May 20 meeting. Financial markets regard a quarter of a percentage point rate on Tuesday as a 95 per cent chance. One rate cut would save the average borrower more than $100 a month but the big banks are forecasting three more rate cuts by the end of 2025 - leading to monthly savings of $400 by Christmas. Carl Ang, a Singapore-based fixed-income analyst with MFS Investment Management, said Labor's landslide re-election and Donald Trump 's tariffs made another rate cut more likely next week. 'Moreover, downside risks and uncertainty around Australia's economic outlook have increased substantially, factoring in Liberation Day, global tariff movements since then as well as the Australian federal election,' he said. 'Overall, global developments likely increase the scope for a more tangibly dovish pivot from the RBA.' An owner-occupier borrower with an average $660,000 mortgage would save $107 on their monthly repayments with one rate cut. In New South Wales, where the average mortgage is higher at $795,000, a borrower is set to save $128 a month as repayments fell to $4,762. The Commonwealth Bank, Australia's biggest home lender, is expecting the RBA to cut rates in May, August and November - taking the cash rate down to 3.35 per cent for the first time since March 2023. For the average borrower with a $660,000 mortgage, this would mean monthly repayments would fall by $419 to $3,641. Commonwealth Bank's head of Australian economics Gareth Aird said the Reserve Bank has beaten inflation. 'We expected the RBA to commence normalising the cash rate in February with a 25bp rate cut, which was delivered, and we also forecast another. 'Our view is that the proverbial inflation dragon has been slayed,' Mr Aird said. Mr Aird said that while the Reserve Bank didn't discuss a rate cut in April, uncertainty sparked by Trump's trade war would make them more inclined to keep cutting rates, as Australians benefited from cheaper Chinese goods. The cost-of-living crisis is also easing with Australian workers now getting real wage increases, where pay levels are outpacing inflation. Treasurer Jim Chalmers said that the strong wage and employment data showed Australia was on track for a soft landing - where the economy slows without falling into recession Wages rose by 3.4 per cent in the year to March which was well above the headline inflation rate of 2.4 per cent - also known as the consumer price index. This meant workers were getting a real wage increase of one per cent. Treasurer Jim Chalmers said that the strong wage and employment data showed Australia was on track for a soft landing - where the economy slows without falling into recession. 'Real wages reflect the progress we've made together on wages but also the progress we've made together on inflation,' Mr Chalmers said. 'We've got wages growing and we've got inflation falling and those are really the key elements of this soft landing that we have been engineering in our economy at a time of really substantial global economic uncertainty.'
