Latest news with #US-instigated
Sky News AU
4 days ago
- Business
- Sky News AU
Consecutive interest rate cuts in doubt after new ABS data showed inflation steady at 2.4 per cent in year to April
Aussies hoping for back-to-back rate cuts may have their hopes dashed as fresh data showed inflation came in hotter than expected. New Australian Bureau of Statistics data showed headline inflation held steady at 2.4 per cent in the year to April while trimmed mean inflation – the middle 70 per cent of price changes that is central to the RBA's call – rose 0.1 per cent to 2.8 per cent. Inflation came in slightly above the market consensus of 2.3 per cent and money markets were pricing in a 60 per cent chance of a cut when the RBA next meets in July after the data was released. This is a fall from the 78 per cent chance factored in on Tuesday. EY's chief economist Cherelle Murphy said the RBA is likely to deliver two more rate cuts during this easing cycle as risks of inflation rising have eased, while economic uncertainty from the US-instigated trade war continues. 'The extent of the cuts will depend on how trade policy and geopolitical frictions impact the global economy and business investment and consumer decisions,' Ms Murphy said. 'We expect at least another two 25bp cuts this year, with possibly more over 2026.' Market analyst at eToro Josh Gilbert said the RBA remains cautious about inflation after delivering a cut last week. 'The RBA will be on watch and ... a rate cut in July is certainly not nailed on,' Mr Gilbert said. 'Last week's rate cut, in which the cash rate decreased to 3.85 per cent, doesn't necessarily set the stage for back-to-back cuts.' The uncertainty from Trump's trade war continues to weigh heavily on the future of the central bank's cash rate calls and the nation's economy. State Street Markets' head of APAC macro strategy Dwyfor Evans said the US trade war, along with Australia's unemployment rate that sits near historic lows, means the RBA will be particularly cautious with future calls. 'Given the continued uncertainty around tariffs, a strong jobs market and the base effects pressures in Q3, expect the RBA to maintain its cautious stance on prospective easing,' Mr Evans said. The cash rate now sits at 3.85 per cent after it was lowered last week for the second time this year. It was held at 4.35 per cent for almost a year and a half as the RBA stamped out post-pandemic inflation. The ABS' latest data showed food and non-alcoholic beverages inflation fell to 3.1 per cent from 3.4 per cent in March in a sign most groceries were dropping in price, according to the ABS' head of prices statistics Michelle Marquardt. 'While annual inflation eased for most food categories in April, egg prices were up by 18.6 per cent in the past 12 months," Ms Marquardt said. "This comes as supply has been affected by bird flu outbreaks.' Housing (up 2.2 per cent) was another large factor in the recent inflation data with rents rising five per cent over the year to April. This marked the lowest annual growth in rents since February 2023 as vacancy rates rise across most capital cities. Electricity prices fell 6.5 per cent in the year to April, compared to a 9.6 per cent fall in the 12 months to March. Power rebates played a significant role for the fall in electricity prices despite the impact of various state and federal concessions phasing out. 'Without all the Commonwealth and state government rebates, electricity prices would have risen 1.5 per cent in the 12 months to April,' Ms Marquardt said.
Sky News AU
23-05-2025
- Business
- Sky News AU
Aussie homeowners could face 'rate hikes again' as inflation risks loom, Judo Bank's chief economist Warren Hogan warns
Aussies who are beginning to feel some financial relief from the recent rate cuts could face mortgage pain again down the track as inflation risks loom, a leading economist has forecasted. The local economy still faces challenges despite inflation falling into the Reserve Bank of Australia's target band and unemployment continuing to sit near historic lows. However, if the large government spending of the past few years continues and the associated inflation risks grow, Aussies could face mortgage stress, Judo Bank's chief economist Warren Hogan said. He also noted economic pressures from overseas, arising from the US-instigated trade war, which could be reason for the RBA to deliver more cuts. 'These challenges that we've been talking about for a number of years, whether it's the rapid growth in government spending or whether it is the inflation pressures sitting in the background, aren't going away,' Mr Hogan said. 'So, if the worst doesn't play out overseas, I fear that we're not going to get much more than that one or two rate cuts. 'On an economy that recovers and continues to grow next year, we could be talking about rate hikes again at some stage. 'There's actually a positive economic story there, but it's got inflation risk with it.' Mr Hogan made his call as the Australian economy begins to recover with consumer spending, wages and business investment rising from the lower levels seen when post-pandemic cost of living pressures hit. After the RBA delivered its second rate cut of 2025 on Tuesday, the central bank's governor Michele Bullock said she was 'confident' in the decision, but noted she remained on watch for economic uncertainty from President Trump's trade war. "I think it's a confident cut in the sense that we think this is the right decision at this point in time," Ms Bullock told reporters. "Where this leads us in the future is a little more uncertain. I'd have to say probably a lot more uncertain, given everything that's going on." The Reserve Bank of Australia on Tuesday lowered the cash rate from 4.1 per cent to 3.85 per cent in a move largely predicted by money markets. Tuesday's cut follows the central bank lowering the cash rate in February 0.25 per cent from 4.35 per cent, where it was held for almost 18 months to stamp out high inflation. Commonwealth Bank of Australia and Westpac each expect two more 0.25 per cent interest rate cuts in 2025 to bring the cash rate down to 3.35 per cent. ANZ expects two consecutive cuts, bringing the cash rate to 3.35 per cent in August, while NAB expects three cuts for a terminal cash rate of 3.1 per cent in November.
Sky News AU
21-05-2025
- Business
- Sky News AU
NAB chief economist Sally Auld explains why Aussies will see three more rate cuts in 2025 after RBA cut cash rate in May
NAB's chief economist Sally Auld has explained why Aussies could be in line for three more rate cuts this year after the Reserve Bank of Australia delivered its second. The RBA on Tuesday lowered the cash rate from 4.1 per cent to 3.85 per cent in a move largely predicted by money markets. It follows the cash rate being held at 4.35 per cent for almost 18 months as the RBA engineered a 'soft landing' from high post-pandemic inflation. Ms Auld said the reduction of inflation, economic uncertainty from the US-instigated trade war and lacklustre consumer spending meant the central bank would take a 'neutral policy setting'. This means the RBA is taking the middle ground between a restrictive approach, which would see it hold or hike rates, or a stimulatory approach, which means many more rate cuts that would be used if the economy deteriorated. The central bank took the second approach in early 2020 when it reduced the cash rate to 0.1 per cent. 'At NAB, we think (the RBA is) probably going to choose that middle path and actually anchor towards a neutral policy setting and on our estimates, that's another three rate cuts from now,' Ms Auld told Sky News Business on Wednesday. After the new rate cut comes into effect, an Aussie with the average owner-occupier home loan of $659,920 would save $213 monthly and $2,553 annually compared to their repayments in 2024, according to comparison site Finder. Many economists and banks are predicting two more 0.25 per cent rate cuts this year, bringing the total monthly savings to $420 and $5,044 annually compared to last year. If NAB's forecast is correct, the savings could be around $6,300 per year for an average household. Commonwealth Bank of Australia and Westpac are each expecting two more 0.25 per cent interest rate cuts in 2025 to bring the cash rate down to 3.35 per cent. ANZ is expecting three consecutive cuts including the May call, bringing the cash rate to 3.35 per cent in August. RBA Governor Michele Bullock said the central bank's decision was a "confident cut", but noted she remained on watch for economic uncertainty from the global trade war. "I think it's a confident cut in the sense that we think this is the right decision at this point in time," Ms Bullock told reporters after her decision. "Where this leads us in the future is a little more uncertain. I'd have to say probably a lot more uncertain, given everything that's going on."
Sky News AU
21-05-2025
- Business
- Sky News AU
Millions of Aussies to save $2500+ annually after Reserve Bank of Australia delivers second rate cut
The average Aussie household will save more than $2500 annually after the Reserve Bank of Australia delivered its second interest rate cut of 2025. The RBA on Tuesday lowered the cash rate from 4.1 per cent to 3.85 per cent in a move largely predicted by money markets. It follows high interest rates and sticky post-pandemic inflation that ate into the buying power of many Aussies doing it tough. After the central bank's recent decision, an Aussie with the average owner-occupier home loan of $659,920 would save $213 monthly and $2,553 annually from the two rate cuts this year, according to comparison site Finder. Many economists and banks are predicting two more 0.25 per cent rate cuts this year, bringing the total monthly savings to $420 and $5,044 annually compared to last year. Finder's head of consumer research Graham Cooke said while the recent cuts will ease some financial stress for households, the pressures from the past few years of high rates still weighs on mortgage holders. 'Frankly, two cuts might not be enough to ease the spike in mortgage stress we've seen since the cash rate started rising again in May 2022,' Mr Cooke said in a statement. 'But it's a step in the right direction and it's great news for homeowners. It's two down and maybe two more to go this year.' The recent rate cut will also deliver a 'well deserved boost' for millions of Aussies who had to bear the brunt of post-pandemic inflation, former Sunrise host and Compare the Market economic director David 'Kochie' Koch said. 'For years, the Reserve Bank has been lecturing us saying 'we got to get inflation under control, we've all got to do our bit, we've got to tighten our belts, we've got to cut back household spending',' Mr Koch said. 'That's what we have done, now the inflation target is down within the Reserve Bank's two to three per cent target range. We absolutely should be rewarded for doing the right thing.' He said Aussies had grappled with roughly $18,000 more each year in home loan repayments since rates peaked in late 2023 and were held for almost a year and a half. 'That's a heavy burden when the cost of everything else from insurances to council rates and energy bills are also causing a lot of pain,' Mr Koch said. Westpac, NAB, ANZ and Commonwealth Bank revealed shortly after the RBA's rates call they would all pass the rate cut for the millions of Aussie homeowners. Commonwealth Bank of Australia and Westpac are each expecting two more 0.25 per cent interest rate cuts in 2025 to bring the cash rate down to 3.35 per cent. ANZ is expecting three consecutive cuts including the May call, bringing the cash rate to 3.35 per cent in August. NAB has remained an outlier as it was predicting a 0.5 per cent cash rate cut on Tuesday and forecast the cash rate to drop to 2.85 per cent by the end of 2025. RBA Governor Michele Bullock said the central bank's decision was a "confident cut", but noted she remained on watch for economic uncertainty from the US-instigated trade war. "I think it's a confident cut in the sense that we think this is the right decision at this point in time," Ms Bullock told reporters. "Where this leads us in the future is a little more uncertain. I'd have to say probably a lot more uncertain, given everything that's going on."
