Mortgage-holders will most likely not see an interest rate cut until next year, Bendigo Bank’s chief economist David Robertson has predicted.
Mr Robertson said there could be a cut as early as September 2024, but “more likely not until 2025”.
“Ultimately RBA rate cuts will depend on core inflation returning to or below 3 per cent and while the latest Monthly Indicator showed CPI down to 3.4 per cent, the core measure was still up at 3.8 per cent in January, which is exactly where we have forecast it will land in the next quarterly numbers out in late April,” he said.
“The RBA’s preferred measure of core inflation, the Trimmed Mean, was 4.2 per cent at the end of 2023 and should continue to ease, but while a fall to 3.8 per cent may see the RBA remove its tightening bias in the May meeting, it won’t be enough for cuts until September at the earliest.”
He said a rate cut in September risks “only being able to deliver one or two rate reductions”.
“… while waiting for our preferred scenario of February 2025 should enable five cuts down to 3.1 per cent” Mr Robertson said.
“The latest GDP data showed as forecast only 0.2 per cent growth for the last quarter of 2023, meaning the Australian economy grew by 1.5 per cent last year, but we remained in a per capita recession as the population grew by around 2.5 per cent.
“Government spending and private investment prevented the economy from contracting, while household spending remained weak and dwelling investment is yet to pick up.
“While households remain under pressure with more falls seen in discretionary spending, household savings recovered a little, and disposable income also rebounded in the last quarter of 2023.”
