Latest news with #StephenKoukoulas
Yahoo
17-05-2025
- Business
- Yahoo
Major banks interest rate cut predictions ahead of hotly anticipated RBA call
The Reserve Bank of Australia (RBA) is expected to give mortgage holders much-needed relief when it meets on Tuesday. All of the Big Four banks are predicting interest rates will be cut, with one bank expecting a supersized cut and another rolling back the pace of its rate cut predictions. NAB is sticking to its forecast of a 50 basis point cut by the RBA. Chief economist Sally Auld has argued the current stance on monetary policy was 'too restrictive' and the bank needed to 'catch up' with recent developments. Economist and Yahoo Finance contributor Stephen Koukoulas agrees that a 50 basis point cut was warranted and said the RBA needed to act to rebalance the economy. RELATED Commonwealth Bank boss pours cold water on supersized $181 RBA interest rate cut Coles shopper 'stunned' after getting $50 item free due to little-known rule: 'Insane' Centrelink issues urgent Age Pension eligibility change warning: 'Double check'Commonwealth Bank, Westpac and ANZ meanwhile, think a smaller 25 basis point cut is on the cards for Tuesday, with markets also pricing in the standard cut. ANZ economists updated their RBA cash rate call on Friday and said there was 'less urgency' for the central bank to ease over the coming months. 'In the wake of the US tariff announcements on 2 April we expected 25 basis point points in May, July and August, getting the cash rate to around a neutral level of 3.35 per cent,' ANZ economists said. 'We now expect 25 basis point rate cuts in May and August this year, with the final 25 basis point of easing in Q1 2026. 'That latter cut comes with a little more uncertainty than the 2025 easings.' ANZ said a May cut was likely the 'path of least regret' for the RBA, given the uncertain global background and encouraging inflation figures. It has softened its language and no longer thinks the cut is 'near certainty' but thinks it's 'more likely than not'. Australia's inflation rate rose 0.9 per cent in the first quarter of the year, with the annual rate holding firm at 2.4 per cent. Underlying inflation, the RBA's preferred measure, increased by 0.7 per cent, with the annual rate easing to 2.9 per cent, which is within the RBA's 2 to 3 per cent target band. The unemployment rate remained steady at 4.1 per cent for April, but 89,000 more Australians were in jobs than the month before. This was more than the 20,000 economists had expected, but wasn't enough for the banks to change their calls. CBA, Westpac, NAB and ANZ all expect the RBA will cut the cash rate on Tuesday. They then expect between three and five more cuts in this cycle. Here's what they are forecasting: CBA - Three cuts in May, August and November to bring end of year cash rate to 3.35 per cent Westpac - Three cuts in May, August and November to bring cash rate to 3.35 per cent NAB - Five cuts in May (50 basis points), July, August, November, and February to take cash rate to 2.60 per cent ANZ - Three cuts in May, August and the first quarter of 2026 to bring cash rate to 3.35 per cent A 25 basis point cut would save the average borrower $91 on their monthly repayments based on a $600,000 loan with 25 years remaining, according to Canstar. Three cuts would result in a $268 drop in repayments. A 50 basis point cut would double this and save the average borrower $181 on their monthly repayments. If NAB's prediction is correct and there is a 1.50 per cent drop to mortgage rates by March 2026, this would lower repayments by $526 a month based on that $600,000 loan. The board will announce its decision at 2:30pm on Tuesday, May 20. Here are the remaining dates it will meet for the rest of the year: July 7 to 8 August 11 to 12 September 29 to 30 November 3 to 4Sign in to access your portfolio
News.com.au
15-05-2025
- Business
- News.com.au
‘Shouldn't get one': Fury over interest rate cut hopes
Desperate Aussies need to be granted three more rate cuts before their dire cost of living situation improves. That's according to one of Australia's leading economists who said February's RBA rate cut has done little to ease financial stress in households nationwide. However debate continues to bubble away as to whether it's the best thing for Australia's economy as a whole, right now. Stephen Koukoulas – regarded by The Australian Financial Review – as one of Australia's most influential economists – believes struggling Aussies will be gifted three more rate cuts through 2025. Speaking on Mark Bouris' Yellow Brick Road podcast, Koukoulas, said February's rate cut had done next to nothing to ease the financial burden on Aussies and little will until the RBA continues to slash the cash rate. Only then will Aussies nationwide be able to toss the gorilla of money worries off their backs. 'People are still not changing the way they spend,' Koukoulas, who is a former senior economic adviser to the Prime Minister's Office, said. 'We need to see three or four rate changes before we see a real change from interest rate relief.' Koukoulas said the vast majority of Aussies are still battling with financial concerns despite overall improvements in the economy, including a reduction in inflation. 'Interest rates are still very restrictive on the economy,' he said. 'They are still causing financial stress through the cost of living issue. Inflation has fallen but cost of living is still very much about mortgage serviceability. '[Worries about] cost of living are not gone, it is still bad.' Despite the big headlines about February's 25 basis points cut to the RBA cash rate, bringing it down to 4.1 per cent, Koukoulas said it didn't move the needle for Aussie households. 'Consumers aren't stupid,' he added. 'They know what is going on. They see the first 25 [basis] points [cut] and think 'that doesn't change my life', the second – 'that's better', but it's only by the time you get three or four cuts that things change.' Such an outlook corresponds with polling that indicates Aussies are planning to hunker down this year and save rather than spend in a trend expected to drag on businesses and stymie economic growth and property prices. February's rate cut certainly hasn't led to a change of conditions in most property markets around the country. The good news for mortgage holders is that Koukoulas believes Aussies will get what they are wishing for – four rate cuts in total by late 2025 of a likely total of 100 basis points. That will start with another rate cut when the RBA meets again on May 20. Real relief might not flow through until 2026 but Koukoulas is confident it will come. 'I do think the RBA will deliver the rate cuts that are priced into the market,' he said. 'We are going to see a series of three, four rate cuts. I think they will cut in May, July and then September. The first cut [February] is just that figurative sigh of relief, it's later when the cash flow relief comes.' Koukoulas said that the RBA would likely make moves to considerably cut interest rates given an improving economic outlook, a stable political environment and the tempering of inflation. However he did says the RBA might not go much further than four rate cuts in the current cycle given global uncertainty. The US Federal Reserve adopted a 'wait and see' approach early this month, when it kept rates on hold in the 4.25 per cent to 4.5 per cent range. In some quarters, the RBA's February cut was seen as an appeasement to the Labor Government ahead of the Federal Election and Bouris echoed the thoughts of several leading economists as to whether the cash rate should have been slashed at all. Those thoughts were based on the fact Australia's trimmed mean consumer price index – which gives a view of underlying inflation by reducing the effect of irregular or temporary price changes that can impact the CPI – was 2.9 per cent in the first quarter of 2025. That is just inside the RBA's target inflation band of two to three per cent. As a result, the rate cuts could hinder the RBA's ability to keep inflation, which has been a massive worry for several years now, under control. 'There's was no way we should be getting a rate cut, if you look at the December quarter number and even the quarters before that. We should not get a rate cut, it's not in the band,' Bouris said. Bouris named respected economist Chris Joye as one leading figure who had questioned the RBA's rate cutting moves. After the February rate cut, Joye wrote in the AFR, that the RBA had 'ignored it's own numbers. 'To avoid the potential for deep rate cuts of 100 basis points or more suddenly being the central election issue, Martin Place has bent over backwards this week to dismiss its own new neutral numbers,' Joye wrote. Bouris also said he had butted heads with Federal Treasurer Jim Chalmers over several contentious economic issues, including inflation and productivity.
Yahoo
09-04-2025
- Business
- Yahoo
RBA interest rate cut push as $50 billion ASX 'crisis unfolds'
The Reserve Bank of Australia (RBA) could have a snap interest rates session to deal with the impact of Donald Trump's tariffs. The ASX 200 has been battered this week thanks to the new US foreign policy, and there are fears it could force Australia into a recession. The board isn't meant to discuss interest rates until May 19-20 meeting. However, with global uncertainty risking the hard work done to bring down inflation. Economist andYahoo Finance contributor Stephen Koukoulas said it was sensible for the central bank to act early and dismissed the move being politicised ahead of the looming election. "Not sure why an off-calendar RBA meeting is catastrophised as an 'emergency'," he said. "It would be prudent. Easier policy is needed as the growth fallout is obvious, the markets are pricing in aggressive cuts, it's a chance for the economic debate to move on from the 'ooo-ahhh' commentary." $4,308 cash boost for Aussies as supersized interest rate cuts loom Centrelink closures and payment changes to hit millions from next week 6am lines for Costco warehouse opening in $118 million move to compete with Coles, Woolworths Treasurer Jim Chalmers met with the leaders of the Big Four banks - ANZ, NAB, Westpac and Commonwealth Bank - and RBA Governor Michele Bullock on Tuesday night. He will convene a meeting of the Council of Financial Regulators, among others, to discuss the global and domestic economic outlook on Wednesday. Chalmers said Australia was in good shape to weather the looming storm and dismissed claims from Opposition Leader Peter Dutton that 'under Labor' the nation was headed for a recession as "reckless"."We're working closely with the regulators and financial institutions to ensure that everything possible is being done to safeguard Australians from this global volatility," the Treasurer said. "These escalating trade tensions are casting a dark shadow over the global economy but Australia's robust economy and budget puts us in good stead." Prime Minister Anthony Albanese doubled down, stating America was not Australia's only trade partner, pointing out growth opportunities in South-East Asia. "80 per cent of world trade does not involve the United States,' Albanese said. 'There's enormous opportunities for Australia to take advantage of where we are in the world... Building our relationship with India. "Continuing to build on our economic relationship with China, a relationship that we have repaired since we've been in government.' It's unclear what the result will be from Chalmers' chat with Bullock, however, the RBA could decide to convene earlier than expected to stem the impacts of the tariffs on inflation. A spokesperson for the RBA told Yahoo Finance it was "monitoring developments very closely" and were continuing to prepare for the May meeting. There are concerns that Australia's economy could be tanked thanks to the penalties inflicted on other countries, particularly on China. Trump escalated the tariff on the Asian superpower by 50 per cent, taking the total to 104 per cent on imports to the US. Koukoulas said the development "should force the RBA's hand for an early policy action", and that the Board should be "proactive" in addressing the tariffs. "Because of the obviously negative effect on Australia, the Monetary Policy Board (MPB) of the RBA should use Section 25AN of the RBA Act to hold a meeting this week to deliver an interest rate cut," he said. There is precedent for this as well, as the RBA met earlier than expected during the Global Financial Crisis and during the pandemic. Greens senator Nick McKim has echoed calls for a snap meeting with the central bank, stating they should not "sit on their hands for another six weeks while the crisis unfolds". 'People are hurting already, and every week of delay increases the risk of a recession which will hurt Australians even more," he said. The ASX saw more than $50 billion wiped off within minutes of the opening bell on Wednesday. The share market dropped 139.70 points to 7,370.30 when it opened for the day, however, it recovered slightly to 7,390.50 at the time of writing. It's the second time this week the ASX fell sharply and the Aussie dollar again traded at just 60 US cents. If the RBA doesn't make a call earlier than May, there could be a supersized cut waiting for homeowners next month. 'On the information we have to hand, the market reaction and past RBA responses to global shocks, more aggressive RBA easing now seems more likely than not,' ANZ head of Australian economics Adam Boyton said. 'Indeed, we would not rule out a 50 basis point cut in May, if sentiment sours and the global growth outlook deteriorates sufficiently." Financial markets are now pricing a more than 100 per cent chance of an interest rate cut in May, with at least four predicted throughout the year. Four rate cuts would see repayments on an average $600,000 mortgage with a current 6.05 per cent rate and 25 years remaining drop by $359 a month, or $4,308 a year. But billionaire Gerry Harvey isn't convinced a huge cut needs to happen. 'I don't think we should be cutting interest rates just yet," he told The Australian. "Why would you cut by 50 basis points? We need to keep our powder dry. Losing confidence can spread like wildfire and if that happens we're in the shit and that could lead to a recession.' All Big Four banks are expecting interest rates will be cut in May. Here's what they are forecasting for the rest of the cycle: CBA - Three cuts in May, August and November to bring end of year cash rate to 3.35 per cent Westpac - Three cuts in May, August and November to bring cash rate to 3.35 per cent NAB - Four cuts in May, August and likely November, with one more to take cash rate to 3.1 per cent by February 2026 ANZ - Three cuts in May, July and August to bring cash rate to 3.35 per cent
Yahoo
29-03-2025
- Business
- Yahoo
Major banks reveal interest rate cut predictions ahead of RBA's April call: ‘Done deal'
The Reserve Bank of Australia (RBA) cut interest rates for the first time since November 2020 in February, bringing the cash rate down to 4.1 per cent. But mortgage holders are being told not to expect 'back-to-back' cuts when the board meets again to set rates next week. Australia's inflation rate eased again in February, with headline inflation dropping to 2.4 per cent. Underlying inflation, which strips out volatile items and government subsidies, dropped to 2.7 per cent. Economist and Yahoo Finance contributor Stephen Koukoulas said the case for an interest rate cut was 'overwhelming', with a 'strong' case on the inflation grounds alone. RELATED 'Overwhelming' reason RBA should cut interest rates next week: 'Fundamentally supportive' Centrelink blow for millions on JobSeeker, Age Pension as federal budget denies cash boost Rare $1 coin worth up to $3,000: 'Crazy errors'But economic teams from the Big Four banks don't think there's enough data to warrant an interest rate cut as soon as next week, with the major banks unanimously forecasting rates will remain on hold. CBA head of Australian economics Gareth Aird said the recent run of data had been 'a little softer' than RBA forecasts but it still wasn't enough for the board to cut the cash rate in April. 'RBA officials have retained a modestly hawkish narrative since the February decision to commence normalising the cash rate with a 25 basis point rate cut,' he said. 'As such, back-to-back rate cuts seem unlikely as it would signal too large a shift in the Board's view on the economy in a short space of time.' The bank expects the next quarterly inflation data, out April 30, will be below the RBA's forecast and if this happens, a 0.25 per cent rate cut in May would be a 'done deal'. The unemployment rate remained steady at 4.1 per cent, which Aird said was also not enough for the board to "pull the trigger and cut rates in April". CBA, Westpac, NAB and ANZ expect the RBA will keep the cash rate on hold at 4.10 per cent in April. CBA, Westpac and NAB expect there will be three more cuts this year, with the next one happening in May. CBA and Westpac think the cutting cycle will finish at the end of the year, while NAB is expecting one more cut in the first quarter of next year, taking the cash rate down to 3.10 per cent. ANZ is expecting just one more cut in August, which would take the cash rate to 3.85 per cent. A mortgage holder with a $600,000 loan and 25 years remaining could see their monthly repayments drop by $91 following another 0.25 per cent cut, Canstar calculated. If a further three cash rate cuts happened by the end of the year, the same borrower could see their repayments drop by a total of $268. That's assuming their bank passed on the rate cut in full to them, which the major banks all did in February. Almost all (94 per cent) of experts surveyed by Finder believed the RBA will hold the cash rate in April. Two in three believed there would only be two or three rate cuts this year, while the remaining third expected only one more cut. The board will announce its next decision at 2:30pm AEDT on Tuesday, April 1. Here are the remaining dates it will meet for the rest of the year: May 19 to 20 July 7 to 8 August 11 to 12 September 29 to 30 November 3 to 4 December 8 to 9Sign in to access your portfolio
Yahoo
22-03-2025
- Business
- Yahoo
Shock figures raise prospect of rate cut
A steep decline in employment figures over the past month has raised prospects the Reserve Bank could cut rates as early as April, economists say. Employment fell by 53,000 in February off the back of a spike in older workers quitting the workforce – against expectations of 30,000 new jobs created, recent Australian Bureau of Statistics (ABS) figures reveal. Full-time employment fell by 35,700 in February and part-time jobs declined by 17,000. However, a fall in jobs can generally mean good news for future rate cuts, because inflation is lowered through reducing demand for staff, which leads to lower wages and in turn less pressure on prices. Overall, the unemployment rate held steady at 4.1 per cent, in line with market was due to less people wanting to work in February compared with January. Market Economic managing director Stephen Koukoulas said the surprising fall in the number of Australians working should be a concern for the RBA. 'Employment dropped a net 22,300 in the first two months of 2025, the weakest first two months of a calendar year since 1991,' Mr Koukoulas wrote on X (formerly Twitter). 'The RBA would be wise to cut to ensure things don't get too much weaker. An interest-rate cut is necessary.' Commonwealth Bank head of economics Gareth Aird said Thursday's jobs figures 'completely blindsided forecasters', with Australia's employment growth now looking more robust than extraordinary. 'We don't think the RBA will be swayed by today's labour market data at the April Board meeting. That is, we still expect the Board to leave the cash rate on hold and resume normalising the cash rate in May with a 25bp rate decrease,' he said. 'But at the margin it adds a little more weight to the ABS February monthly CPI indicator, due March 26.' Mr Aird said if inflation data due in March comes in below RBA 0.7 per cent quarterly forecast 'April 1 board meeting could shift to live.' KPMG chief economist Brendan Rynne said the large drop in employment could be a sign households are getting on top of their finances as more Aussies retired and the female participation rate dropped. 'It is possible that a combination of the stage 3 tax cuts, the February interest rate cut and some wages growth in partner incomes have done enough to ease household budgets and pull them back from looking for work,' Mr Rynne said. The RBA cut the cash rate for the first time since the covid pandemic in February dropping the cash rate from 4.35 to 4.1 per cent. The bank's new monetary policy board will meet on March 31 to April 1 but so far markets are predicting the next rate cut will come in May.
