Financial guru Mark Bouris has warned that interest rates are unlikely to fall until next year and that inflation will take longer than expected to ease.
The cash rate was held unchanged at a 12-year high of 4.35 percent last month, but minutes from the Reserve Bank of Australia’s most recent meeting warned that inflation was still high.
The Reserve Bank’s latest forecasts predict inflation will fall to 2.8 percent by December 2025.
But minutes from the June meeting, released on Tuesday morning, suggested inflation could take a little longer to ease, spelling bad news for the 3 million Australians with a mortgage.
Mr Bouris, founder of Wizard Home Loans, told Sunrise that June quarter inflation figures, due at the end of July, would give the best indication of where it was heading.
When asked by co-host Matt Shirvington if we were close to seeing a rate cut, Bouris said that wasn’t likely in the near future.
“I don’t know if we’re close to that, I think it’s more likely that we’ll see rates come down sometime late next year in 2025, at least that’s what the money-market economists are predicting,” he said.
‘The Reserve Bank’s predictions about what its interest rate rises would do are going to take longer to implement. They are simply taking longer to adjust people’s spending.’
Financial guru Mark Bouris has said interest rates are unlikely to fall until next year amid gloomy news that rates could rise again because inflation is taking longer than expected to subside.
The chairman of mortgage lending company Yellow Brick Road added that 30 per cent of Australian homeowners who do not have a mortgage are the ones spending money.
“The other 31 percent who have a mortgage are in trouble,” he said.
Minutes of the RBA’s June meeting also confirmed that the board had discussed raising the cash rate.
“Raising the cash rate at this meeting might be appropriate if members were of the view that monetary policies were not sufficiently restrictive to return inflation to target within a reasonable timeframe,” it said.
Following the latest RBA meeting, Governor Michele Bullock confirmed that her board had considered a rate hike during its two-day meeting.
“Yes, the board of directors discussed the case for raising interest rates at this meeting,” he told reporters.
Australia’s most powerful central banker also confirmed that a rate cut was not even being discussed, even though home borrowers have endured the most aggressive increases since the late 1980s.
“No, the possibility of a cut has not been considered,” he said.
Another rate hike would take the RBA’s cash to a new 13-year high of 4.6 percent and add $100 a month to the repayments of an average $600,000 mortgage.
The Reserve Bank will meet again on 5 and 6 August, following the publication of more comprehensive June quarter inflation data on 31 July.