Latest news with #StephenWu
Yahoo
5 days ago
- Business
- Yahoo
Sign RBA could deliver three interest rate cuts this year: 'Sooner'
The Reserve Bank of Australia (RBA) may be pressured to cut interest rates again in July after economic growth was weaker than expected. The Australian economy grew just 0.2 per cent in the March quarter, down from 0.6 per cent in the December quarter. The latest national accounts published by the Australian Bureau of Statistics (ABS) found economic activity increased by just 1.3 per cent over the year to March. The RBA had forecast annual GDP growth of 1.8 per cent by the end of the June quarter. Per capita, GDP went backwards again and was down 0.2 per cent in the quarter and 0.4 per cent for the year. RELATED Commonwealth Bank announces huge interest rate cut following RBA decision: 'Stampede' Centrelink warning after Aussie mum's $15,000 payment was denied: 'Common mistake' Centrelink cash boost over 400,000 Aussies have weeks left to confirm Some economists have pulled forward their rate cut predictions following the 'gloomy' growth outlook and think the RBA could deliver a back-to-back rate cut in July. AMP deputy chief economist Diana Mousina had previously been expecting another 0.25 per cent cut in August, November and February, but has now added another 0.25 per cent cut in July. 'This means that the cash rate is likely to end up around 2.85 per cent at the end of the rate cutting cycle,' she said. Commonwealth Bank senior economist Stephen Wu said the bank's base case remained for another 0.25 per cent cut in August, but an earlier July cut remained a possibility with labour market and inflation data likely to be in the RBA's sights. 'July very much remains a live meeting and today's data has further shifted the balance of probabilities towards a cut,' he said. 'Market pricing for July has lifted and the May Board Minutes did little to push back at this.' Oxford Economics Australia lead economist Ben Udy said the RBA would be watching closely for further signs of the March quarter weakness extending to the June quarter. "If that evidence continues to rack up, the RBA may opt to cut rates again in July, a little sooner than our current forecasts suggest,' he said. IFM Economist Alex Joiner said the GDP data 'only added to the case that the Bank will ease in July rather than wait until August'. Goldman Sachs Australia chief economist Andrew Boak said there could be three more interest rate cuts this year. 'We see a strong case for the RBA to cut again in July, particularly given inflation has returned to target and a 50 basis points reduction was considered in May," he said. 'Further ahead, our base case is for cuts in August-November to a terminal rate of 3.1 per cent, but we see the risks as skewed firmly to the downside.' The RBA cut interest rates at its June meeting by 0.25 per cent, but governor Michele Bullock said the board did consider the possibility of a larger 0.50 per cent cut. Economist and Yahoo Finance contributor Stephen Koukoulas said a supersized interest cut was justified at the upcoming July meeting, branding the 0.2 per cent growth as "pathetically weak". 'The bottom line is we need to see a 50 point rate cut from the RBA at the July meeting. The longer it takes to get the cash rate to a neutral, let alone accommodative level, the worse the economy will be. 'That neutral level is somewhere in the low 3 per cent, we are currently at 3.85 per cent, so we are 75 points away from the cash rate being neutral, that's not even accommodative.' One additional 0.25 per cent interest cut would see the average borrower's repayments drop by $90, based on a $600,000 loan with 25 years remaining. The RBA board will meet again on July 7 and 8.
Yahoo
28-05-2025
- Business
- Yahoo
Major bank's warning to mortgage holders over next RBA interest rate cut: 'No smoking gun'
The Commonwealth Bank has warned mortgage holders not to expect back-to-back interest rate cuts from the Reserve Bank (RBA). Inflation data came in higher than expected today, dashing hopes of a July rate cut. Australia's annual inflation rate held steady at 2.4 per cent in April, which was higher than market forecasts of 2.3 per cent. Underlying inflation, which is the RBA's preferred measure, edged higher to 2.8 per cent, which was up from 2.6 per cent in March and also stronger than expected. Commonwealth Bank economist Stephen Wu said inflation remained 'reasonably benign' but supported the RBA taking a 'cautious and data-dependent approach' to rate cuts in the absence of any big global shocks. RELATED Mortgage broker's $70,000 trick to take advantage of RBA interest rate cut: 'Big difference' $1,831 Centrelink payment change coming within weeks: 'You'll get more' ATO warning over popular tax deduction Aussies try to claim each year: 'Not claimable' 'So far, there's been no smoking gun for the RBA to deliver another 25 basis point cut in their July meeting," he said. 'We maintain our base case that the RBA will want to deliver further cuts in a cautious way, and that the domestic data for now will evolve in such a way to enable that.' The country's biggest bank expects there will be two more interest rate cuts this year, with the central bank expected to move a little quicker than previously expects a 25 basis point cut in August and another 25 point cut in September, brought forward from November. There is also the possibility of an extra cut this year, bringing the cash rate target to 3.10 per cent, but it will depend on upcoming data and offshore developments. Wu said the upcoming GDP data and early reads on spending would be 'key', together with labour market data. Australian Bureau of Statistics figures found the biggest contributors to the annual inflation movement were food and non-alcoholic beverages (3.1 per cent), housing (2.2 per cent) and recreation and culture (3.6 per cent). Betashares chief economist David Bassanese said the results were 'mildly disappointing' and were 'not good enough to justify an RBA rate cut as early as July'. 'With concerns over US tariff policy easing in recent weeks, and the all-important June quarter CPI report due in late July, it was always more likely that the RBA would hold off cutting interest rates until August – barring an economic emergency,' he said. KPMG senior economist Dr Michael Malakellis also expects the RBA will be 'cautious' in cutting rates too quickly. 'Although today's data suggests that inflation remains persistent, it also confirms that the RBA now has more headroom to act quickly in reducing rates if negative shocks threaten the growth outlook,' he said. Bassanese expects the RBA will still cut rates at least two more times this year and will follow the quarterly data. 'My base case remains that the RBA will cut rates in August and November, directly following the next two quarterly CPI reports — assuming these reports confirm an easing in annual underlying inflation to the midpoint of the RBA's 2-3 per cent target band,' he said. Malakellis said KPMG's central case was just one more cut this year in the third quarter. NAB expects three more rate cuts in July, August and November, Westpac expects two in August and November, while ANZ expects one in August and one in the first quarter of 2026. All of the Big Four banks have passed on May's rate cut in full to variable customers. CBA, NAB and ANZ will cut rates on May 30, while Westpac will do so on June while retrieving data Sign in to access your portfolio Error while retrieving data
West Australian
14-05-2025
- Business
- West Australian
Aussie wages: Australian Bureau of Statistics data shows wages grew 3.4 per cent for year to March
Australian wages lifted 3.4 per cent over the past 12 months, with education, healthcare and social assistance among the best performers so far this year. That was faster than the pace of inflation, which was 2.4 per cent for the year to March. But although the figures were an improvement on the previous quarter, there was a sign that wages may not keep growing faster than the cost of living. March quarter wage growth was 0.9 per cent, according to the Australian Bureau of Statistics on Wednesday. That was in line with inflation for the same three month period. Commonwealth Bank senior economist Stephen Wu recently said an uptick in quarterly wages growth was expected for March. That reflected rising award wages and new enterprise agreements. 'We view such an outcome as a wage 'catch-up' and not indicative of a re-tightening in the labour market,' he said. Mr Wu said the jobless rate was close to the level which would limit pressure on inflation. Jobs figures will be released on Thursday and will be the final key dataset for the Reserve Bank ahead of an interest rate meeting next week. Markets are widely expecting the RBA to cut the official cash rate for the second time this year, to 3.85 per cent. That follows growing uncertainty in the global economy amid US President Donald Trump's chaotic trade war. More to come
Yahoo
30-04-2025
- Business
- Yahoo
Easing inflation gives mortgage relief hope
Australia's inflation rate has risen slightly during the March quarter, just weeks out from the Reserve Bank's next interest rate decision. Official consumer price index figures released by the Australian Bureau of Statistics on Wednesday showed headline inflation rose by 0.9 per cent over the quarter due to state subsidies on energy being wound back. It came in at an annual increase of 2.4 per cent, which was unchanged from December 2024. The all important trimmed mean inflation, which strips out volatile assets and is the preferred RBA measure, came in at 2.9 per cent for the year down from 3.3 per cent in the December quarter. This was the lowest annual inflation rate since Decemeber 2021. The main contributor to the headline quarterly inflation rises were housing up 1.7 per cent, education soaring 5.2 per cnet and food and no-alcholic beverages which grew 1.2 per cent. Much fo the quarterly growth in housing was driven by electiricty which surged 16.3 per cent as the Queensland state gvoverment rebate of $1,000 ended in the quarter. Annual Goods inflation was 1.3 per cent, up from 0.8 per cent in the previous quarter. The increase in annual Goods inflation was again primarly due to electricity. Annual Services inflation was 3.7 per cent in the March quarter, down from 4.3 per cent in the December quarter. 'This is the lowest annual outcome for Services inflation since the June 2022 quarter, reflecting easing inflation across a broad range of services, including rents and insurance,' Mr ABS acting head of prices statistics Leigh Merrington said. Commonwealth Bank economist Stephen Wu previously said if the trimmed mean inflation rate came in at below the RBA's forecast of 0.7 per cent, a May interest rate cut was a 'done deal'. 'Following the March labour force survey, we think a 25 basis point rate cut in May is still more likely than not if the trimmed mean CPI prints in line with the RBA's forecast,' Mr Wu said. 'If the trimmed mean CPI is in line with our forecast (or below), then we consider a rate cut in May is a done deal.' If CBA is correct with a 25 basis point rate cut, Canstar figures homeowners with a $600,000 mortgage would see their monthly repayments drop by $91. While the RBA held the official cash rate at 4.10 per cent during the April meeting, it left the door open to future rate cuts. More to come
News.com.au
30-04-2025
- Business
- News.com.au
Inflation eases as the price of essentials falls
Australia's inflation rate has risen slightly during the March quarter, just weeks out from the Reserve Bank's next interest rate decision. Official consumer price index figures released by the Australian Bureau of Statistics on Wednesday showed headline inflation rose by 0.9 per cent over the quarter due to state subsidies on energy being wound back. It came in at an annual increase of 2.4 per cent, which was unchanged from December 2024. The all important trimmed mean inflation, which strips out volatile assets and is the preferred RBA measure, came in at 2.9 per cent for the year down from 3.3 per cent in the December quarter. This was the lowest annual inflation rate since Decemeber 2021. The main contributor to the headline quarterly inflation rises were housing up 1.7 per cent, education soaring 5.2 per cnet and food and no-alcholic beverages which grew 1.2 per cent. Much fo the quarterly growth in housing was driven by electiricty which surged 16.3 per cent as the Queensland state gvoverment rebate of $1,000 ended in the quarter. Annual Goods inflation was 1.3 per cent, up from 0.8 per cent in the previous quarter. The increase in annual Goods inflation was again primarly due to electricity. Annual Services inflation was 3.7 per cent in the March quarter, down from 4.3 per cent in the December quarter. 'This is the lowest annual outcome for Services inflation since the June 2022 quarter, reflecting easing inflation across a broad range of services, including rents and insurance,' Mr ABS acting head of prices statistics Leigh Merrington said. Commonwealth Bank economist Stephen Wu previously said if the trimmed mean inflation rate came in at below the RBA's forecast of 0.7 per cent, a May interest rate cut was a 'done deal'. 'Following the March labour force survey, we think a 25 basis point rate cut in May is still more likely than not if the trimmed mean CPI prints in line with the RBA's forecast,' Mr Wu said. 'If the trimmed mean CPI is in line with our forecast (or below), then we consider a rate cut in May is a done deal.' If CBA is correct with a 25 basis point rate cut, Canstar figures homeowners with a $600,000 mortgage would see their monthly repayments drop by $91. While the RBA held the official cash rate at 4.10 per cent during the April meeting, it left the door open to future rate cuts.
