ANZ chief executive Shayne Elliott believes predictions of an interest rate cut in early 2025 are off base and mortgage holders will have to wait longer.
Elliott said expectations of a cut as early as February are adrift due to persistent inflation, leaving borrowers with many more months of high mortgage payments during a cost-of-living crisis.
Elliott told 9 News he fears inflation is “a little more established than we would like”, and suggests the RBA has proven steadfast in using it as its key guide to monetary policy.
“That’s what worries me,” he said.
Elliot’s view is backed by RBA deputy governor Andrew Hauser, who used his recent “fireside chat” format at the CBA Global Market Conference in Sydney to indicate that borrowers should not expect an early Christmas present in form of rate cuts.
He said the RBA was focusing on its dual mandate of keeping prices stable at 2 to 3 per cent while supporting full employment.
“It was a deliberate choice on our part not to tighten as much to protect employment gains, with the recognition that if we didn’t tighten as much, inflation would take longer to return and rates would not fall as much or as soon as they have. in other countries,” said Mr. Hauser.
ANZ chief executive Shayne Elliott (pictured left) fears the Reserve Bank of Australia will not cut interest rates as early as February as expected.
RBA Deputy Governor Andrew Hauser reaffirmed that homeowners hit by the cost of living crisis should not expect an early Christmas present in the form of rate cuts.
The current cash interest rate set by the RBA is 4.35% and has remained unchanged since November 2023.
The RBA has kept the exchange rate stable for seven consecutive meetings, after increasing the official cash rate 13 times between May 2022 and November 2023.
The latest quarterly inflation figures will be released next week and will play a major role in how the RBA decides to act when it meets on Melbourne Cup day, November 5.
Yahoo Finance reported the big four banks’ predictions on rate cuts.
The Commonwealth Bank predicts a cut in December 2024, and Westpac, NAB and ANZ predict a cut in February 2025.
ANZ Bank, Westpac and NAB had predicted an interest rate cut in February 2025. ANZ chief executive Shayne Elliot fears this will not happen
Hauser acknowledged that the RBA has come under fire for prioritizing the low unemployment rate rather than crushing the cost of living crisis.
He said Australia’s central bank welcomed stronger-than-expected employment figures.
Australia’s labor market was surprisingly strong with the addition of 64,100 jobs according to September figures released by the ABS.
Despite the slight drop in the number of unemployed, the strong increase in employment saw the participation rate rise by 0.1 percentage point to a record 67.2 percent.
Hauser said the RBA had taken an independent path in fighting inflation and would not simply follow the lead of the US Federal Reserve or the Bank of England, which have begun their cycle of rate cuts.
“The reason we are not cutting rates right now compared to other central banks is because inflation is still too high,” he said.