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The first major announcement on the state of the economy was released during the week in the for of the November inflation figure.
The latest official data shows inflation slowed from 4.9 per cent over the year to October to 4.3 per cent over the year to November, the slowest rate of price rises since January 2022.
This number suggests the RBA’s cash rate hikes have really started to bite where they most wanted it to, with evidence now showing that consumer spending has hit the skids.
In this week’s newsletter, we take a look at what the pundits are saying about the likelihood of interest rate cuts in 2024.
There is a widespread consensus among economists that the RBA will initiate interest rate cuts in the latter half of this year, maintaining stability until then.
Anticipated Decline in 2024
When the reduction in interest rates commences, economists are certain it will be a gradual decline, nowhere near the levels observed before May 2022. However, there is a lack of consensus among experts regarding the extent of potential rate cuts expected in the current year.
The following chart shows what some of the industry experts are predicting for the year ahead –
| Institution | Dec 24 | Change |
|---|---|---|
| CBA | 3.60% | -0.75% |
| NAB | 4.45% | +0.10% |
| Westpac | 3.85% | 0.50% |
| ANZ | 4.10% | -0.25% |
| AMP | 3.60% | -0.75% |
| KPMG | 3.85% | -0.50% |
| Deloitte | 3.85% | -0.85% |
| Morgan Stanley | 4.60% | +0.25% |
Whilst nearly all 37 institutions in a recent Financial Review survey predicted rates to fall in 2024, there were a few who weren’t so optimistic, such as National Australian Bank and global player JP Morgan.
Is There One More Hike To Come?
Plenty of economists up until this week’s November inflation figure announcement were suggesting one more increase was likely, however with with the announcement that inflation growth had slowed to an even greater extent than was predicted, this is forcing a rethink.
The question now is, off the back of this week’s ‘good’ inflation figure for November, will the RBA cool their jets. December is a big spending month due to Christmas and school holidays, so the waters are somewhat muddier at this time of year about what is going on in the economy.
As always, we await the RBA’s announcement on February the 8th.
Variable
The rates below are based on a $500,000 loan, with the borrower making principle and interest payments with a loan term of 30 years. The rates quoted may vary depending on the borrowers LVR.
1 Year Fixed
The rates below are based on a $500,000 loan, with the borrower making principle and interest payments with a loan term of 30 years. The rates quoted may vary depending on the borrowers LVR. At the end of the three year fixed period, the borrowers interest rate will revert to a standard variable rate for the life of the loan.
