Roel Capital’s Post

Is a cash-rate cut around the corner? 🤔 With two of the country’s Big 4 Banks slashing fixed rate pricing by up to 80 basis points over the past week, there is a growing expectation that the RBA’s next move will be to reduce the cash rate. Similarly, per the AFR’s opinion piece below, there are several other indicators which tend to support the notion of an imminent cash rate cut: 1️⃣ “The market ends up determining the cash rate more than the central bank”. Ultimately, this is a key dictator in the RBA’s decision-making process over the medium term. Per Jonathan Roël's post last week, the ASX implied yield curve is forecasting a futures yield of 3.86% in March 2025, which is circa 50 basis points lower than today’s cash rate of 4.35%. 2️⃣ NZ, Canada, the UK and Europe have started cutting rates, with the US expected to follow suit next month. It is unlikely the RBA will be able to avoid cutting rates for much longer, with mounting potential recession risks the longer they hold off. 3️⃣ Expectations of lower inflation & higher unemployment figures than forecast in the September print, supported by CBA’s head of Australian economics, Gareth Aird. This should in turn force the RBA’s hand in line with the Bank’s forecast of a November rate cut.   Roel Capital #interestrates #loans #propertyfinance #mortgagebroking #yieldcurve #fixedrates The opinion expressed above is subjective in nature and does not constitute financial advice.