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RBA hints interest rates will stay higher for longer, holds interest rates at 4.35%. Inflation is 'too high'. The economy is 'not growing', but 'getting inflation back to 2.5% is key'
There's now a very slim chance of any interest rate cuts in Australia for some time, and bets are now almost off for the RBA to cut rates next year, with the RBA saying they are not ruling anything in or out. For investors, this means focusing on quality companies will be key.
While the RBA kept Australia's official interest rate at 4.35%, as expected today, the RBA's language and tone spooked some. RBA Governor Bullock really put the nail in the coffin at the press conference, hinting that interest rates could stay higher for longer.
Governor Bullock said, "Inflation is too high," and emphasized, "Getting inflation back to 2.5% is key." Moments earlier, she also mentioned, "The economy is not growing," and that Australians will find it harder to find work as businesses struggle.
Last week's inflation read showed the trimmed mean inflation, which the RBA closely watches, rose to 3.5% year-over-year in the quarter, while the prior inflation read was revised higher to 4% CPI year-over-year.
The RBA cash rate futures have now almost erased all expected interest rate cuts for 2025, with traders seeing only about 0.43% of rate cuts before 2025 ends. The first potential interest rate cut is anticipated in July, with markets estimating a 54.7% chance of an RBA rate cut then, as highlighted below.
Here are some other remarks from the RBA
Here is the RBA announcement Statement by the Reserve Bank Board: Monetary Policy Decision | Media Releases
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Jessica Amir
Moomoo Official Market Strategist
moomoo, market strategist.
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151453268 witso : We cant expect the baskets of goods to magically become cheaper now,the horse has bolted sinking or swimming is what will happen for now, the economy and the people will be screwed down until the RBA slowly release the breaks hopefully they are smart enough not to damage the economy by absorbing all the cash reserve, cant be too sure as they were asleep on the inflation up cycle.
Coach Donnie : Wow
Thank you @Jessica Amir