WHEN WILL INTEREST RATES BEGIN TO SLIDE BACK AGAIN?

Experts’ Views on the Timing of Interest Rate Reductions in Australia are varied. Whilst nobody has a crystal ball, there seems to be some consensus around early 2024.

Current indicators are promising, with Forbes reporting that spending on discretionary goods and services was down 0.6% in May and that new ABS figures recently released shows Australians spend nearly 5% less on furnishings and household equipment in the past 12 months, and 3.4% less on clothing and footwear.

However, overall household spending in may rose 3.3% according to Forbes, but this has been attributed to higher costs in transport, hotels and restaurants.

In June, the monthly inflation figure was 5.6%. This is below the RBA’s targeted 2%-3% range but is the smallest increase since April last year.

ABS head of price statistics, Michelle Marquardt, noted that the annual increase of 5.6% to the month of May, contained a modicum of good news.

Meanwhile, the big four banks have varying opinions on when interest rates will go down:

– ANZ: Late 2024
– Commonwealth Bank: Early 2024
– NAB: Early/mid 2024
– Westpac: Early 2024

Other experts’ opinions include:

– Mark Crosby (Applied Macroeconomist and Director of the Bachelor of International bBusiness at Monash Business School): Rates may fall before 2024 if inflation decreases, but further rate increases are still possible in the short term.
– Leanne Pilkington (CEO of real estate group Laing+Simmons and Deputy President of the Real Estate Institute of Australia): Best-case scenario for rates to trend down is mid-2024, with inflation being a key factor to watch.
– Tina Teng (Markets Analyst for CMC Markets APAC & Canada): Expects a rate-cut cycle to begin in early 2024 due to global risks and potential impacts from the US regional banks’ crisis and China’s reopening progress.

While experts have provided estimates for when interest rates in Australia may start to decrease, it’s important to note that these predictions are based on the current economic climate and are subject to change. Interest rate decisions are influenced by a multitude of factors, including inflation, employment trends, and global economic conditions. To stay informed about the latest developments, it’s advisable to follow updates from financial institutions, economists, and central banks like the Reserve Bank of Australia.