While the Reserve Bank of Australia has kept rates on hold yet again, the big question is—how much longer will this last? 

And more importantly, when might we see the next rate cut? 

With the local economy sending mixed signals, it seems that many economists are finding it increasingly difficult to predict the RBA’s next move. In fact, they keep changing their forecasts. 

But it's not just our local factors in play. 

Overseas developments, particularly the political shifts in the United States with a newly elected president, could have ripple effects that impact our rates here in Australia. 

How will these global pressures influence the timing of any rate cuts? And what might it mean for property markets and investors looking to plan their next move? 

That’s what I discussed today with Dr Wilson, chief economist of My Housing Market, in today’s podcast. 

Takeaways

·       The RBA has held rates steady for the eighth consecutive month, but with economic signals unclear, economists are finding it increasingly difficult to forecast the next move. While many expect a rate cut next year, Dr. Andrew Wilson predicts it may not come until at least late 2025.

·       The RBA has indicated that inflation is unlikely to settle within its target range (2-3%) until 2026. With underlying inflation still above 3%, the RBA is expected to keep rates "restrictive" until inflation is sustainably under control.

·       Despite the cost-of-living pressures, the Australian economy remains resilient with a low unemployment rate, record-high workforce participation, and robust job growth. Retail sales are also holding strong, staying well above pre-COVID levels.

·       Political and economic shifts overseas, particularly in the U.S., could impact the RBA's future rate decisions, adding an extra layer of uncertainty for investors and homeowners trying to plan their next steps.

·       The latest ABS data shows a slight decrease in the total value of new housing loans in September, with a 0.3% drop to $30.2 billion. While investor loans fell by 1.0%, owner-occupier loans inched up by 0.1%. Investor loan values remain high in states with strong housing markets.

Links and Resources: 

Michael Yardney 

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Shownotes plus more here: What’s Next for Interest Rates? Dr. Andrew Wilson’s Predictions for 2025