The boss of one of Australia’s biggest banks fears interest rates may not be cut early next year.
ANZ CEO Shayne Elliott believes the Reserve Bank of Australia (RBA) won’t reduce interest rates as early as February as had been hoped.
Mr Elliott believed rate cuts may be delayed due to persistent inflation, slamming home owners even more during the cost of living crisis.
Mr Elliott told 9 News he fears inflation is ‘a little bit more set-in than we may like’, and suggests the RBA won’t cut the rate.
‘That’s what I worry about,’ he said.
Mr Elliot’s view is backed up by RBA deputy governor Andrew Hauser, who used his recent ‘fireside chat’ format at the CBA Global Market Conference in Sydney to reaffirm homeowners shouldn’t expect an early Christmas gift in the 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 also supporting full employment.
‘It was a deliberate choice for us to not to tighten as much to protect employment gains, with a recognition that not tightening as much that inflation would take longer to come back and that rates would not fall as much or as early as it has in other countries,’ Mr Hauser said.
ANZ CEO Shayne Elliott (pictured left) fears the Reserve Bank of Australia won’t reduce interest rates as early as February as had been hoped
RBA deputy governor Andrew Hauser reaffirmed homeowners slammed by the cost of living crisis shouldn’t expect an early Christmas gift in the form of rate cuts
The current interest rate set by the RBA is 4.35% and has remain unchanged since November 2023.
The RBA has kept the rate steady for seven consecutive meetings, after lifting the official cash rate 13 times between May 2022 and November 2023.
The latest quarterly inflation figures are due to be released next week and will play a big part in how the RBA decides to act when it meets on November 5.
Yahoo Finance reported the big four banks’ predictions of rate cuts.
The Commonwealth Bank is predicting a cut in December 2024, with Westpac, NAB and ANZ all predicting a cut in February 2025.
ANZ Bank, Westpac and NAB had been predicting an interest rate cut in February 2025. ANZ CEO Shayne Elliot fears this won’t happen
Mr Hauser acknowledged the RBA has received flak for its strategy of favouring a lower unemployment rate over crushing the cost of living crisis.
He said stronger than expected job figures were welcomed by Australia’s central bank.
Most recently Australia’s job market came in surprisingly strong with the addition of 64,100 jobs according to September figures released by the ABS.
Despite the slight fall in the number of unemployed people, the strong rise in employment saw the participation rate rise by 0.1 percentage point to a record high of 67.2 per cent.
Mr Hauser said the RBA had taken a unique path when it came to fighting inflation, and would not simply cut rates in line with the US Federal Reserve or The Bank of England.
‘The reason we are not cutting rates at the moment compared to other central banks is because inflation is still too high,’ he said.
