Australian Interest Rates To Fall Q4 According To Economists.
Australian Interest Rates To Fall Q4 – Australia’s economy looks to have weathered the worst, with inflation falling, interest rates on hold pending easing later in the year, tax breaks coming mid-year, and lifting consumer sentiment.
It’s good news for the electronic security industry, much of which depends on residential and SME work, particularly in sensitive areas of the economy like retail and hospitality.
After peaking at 7.8 per cent in December 2022, inflation has fallen sharply, sliding to 4.1 per cent in the December quarter. Since then, Australia’s inflation was 3.4 per cent for the month of December and 3.4 per cent for the month of January, which aligns with predictions price growth will fall to 3.3 per cent by June 30.
RBA still argues there’s a long way to go before inflation is back within its favoured 2-3 per cent target range but it’s difficult to know how much of its position is an attempt at social conditioning already branded on vulnerable consumers by a series of rapid interest rate rises.
Australian Interest Rates To Fall Q4
These stressors on borrowers stifled economic growth by controlling a spike in inflation from mid-2022. Economists have since suggested the inflation spike was more about service providers, manufacturers and distributors extending margin to recover COVID losses than material impact of events like the war in Ukraine or extended latency in supply chains.
It’s difficult not to feel that ANZ’s underlying vulnerability to inflation stems from a series of monopolies in key supply and distribution chains, including food, vehicle imports, air transport, retail, energy and banking, that successive government regulators have failed to address for decades.
Food prices are a case in point, spiking more than 10 per cent for local produce and much higher in the case of meat, which remains at record highs despite good growing conditions in both countries. Air transport was another area in which prices spiked by multiples post-pandemic.
RBA’s latest forecasts have inflation falling to 3.3 per cent by June 30 this year, with a prediction it will take 12 months for a further slight easing to 3.1 per cent by June 2025. Australia’s central bank argues inflation will only fall into its target range of 2.8 per cent – potentially triggering an easing of interest rates – in December 2025. But retail banks argue inflation will fall much faster, sliding to 3 per cent this December.
Australian Interest Rates To Fall Q4
RBA’s latest announcement tends to suggest it will hold interest rates at current levels until deeper into the year, allowing a fuller picture of growth, prices and employment to emerge – recent statements by major retail bank economists suggest they expect an easing of interest rates in Q4 2024 that will continue into 2025.
In the medium term, population growth through immigration looks set to have a significant impact on the Australian economy over the next 4 years. With building squeezed by rising costs there are huge housing shortfalls nationally that will emerge as higher house prices, higher rents, and ultimately, a building boom once state and local governments disentangle themselves from red tape.
An adjacent positive indicator recently was Australia’s February Labour Force Survey, which indicated jobs growth of 116,500 for the period, despite predictions of continued softness.
Consumer sentiment rose 6.2 per cent in February. Sentiment remains low at 86 per cent but is likely to continue building into positive territory, with falling inflation, interest rate stability, and tax breaks later in the year, and interest rate reductions beginning in Q4.
You can read more about the Australian economy here or find more SEN news here.
“Australian Interest Rates To Fall Q4 According To Economists.”
