ANZ boss’s major interest rate call that’s bad news for homeowners: ‘I worry about it’
ANZ CEO Shayne Elliott believes predictions of a rate cut in early 2025 are wrong and mortgage holders will have to wait longer.
Mr Elliott said expectations of a cut were drifting as early as February due to persistent inflation, leaving borrowers with many more months of high mortgage payments amid a cost-of-living crisis.
Mr Elliott told 9 News he fears inflation is “a bit more entrenched than we might like”, suggesting the RBA has been steadfast in using it as the main guide to monetary policy.
“That’s what I’m worried about,” he said.
Elliot’s views are supported by RBA deputy governor Andrew Hauser, who used his recent ‘fireside chat’ format at the CBA Global Market Conference in Sydney to indicate that borrowers should not expect an early Christmas present in the form of rate cuts.
He said the RBA was focused on its dual mandate of keeping prices stable at 2 to 3 percent while supporting full employment.
“It was a conscious decision for us not to tighten as much to protect job growth, recognizing that if we don’t tighten as much, it would take longer for inflation to return and interest rates wouldn’t rise as much or as quickly.” decrease as in recent years. other countries,” Mr. Hauser said.
ANZ CEO Shayne Elliott (pictured left) fears the Reserve Bank of Australia will not cut rates as early as February as hoped
RBA Deputy Governor Andrew Hauser reaffirmed that homeowners hit by the cost of living crisis should not expect an early Christmas present in the form of interest rate cuts
The current interest rate set by the RBA is 4.35% and has remained unchanged since November 2023.
The RBA has held rates steady for seven consecutive meetings, after raising the official cash rate 13 times between May 2022 and November 2023.
The latest quarterly inflation figures will be released next week and will play a big role in how the RBA decides to act when it meets on Melbourne Cup day, November 5.
Yahoo Finance reported the four major banks’ predictions about interest rate cuts.
The Commonwealth Bank predicts a cut in December 2024, while Westpac, NAB and ANZ all predict a cut in February 2025.
ANZ Bank, Westpac and NAB predicted a rate cut in February 2025. ANZ CEO Shayne Elliot fears this won’t happen
Mr Hauser acknowledged that the RBA has faced criticism for prioritizing a low unemployment rate over suppressing the cost of living.
He said stronger than expected jobs data was welcomed by Australia’s central bank.
The Australian labor market was surprisingly strong with the addition of 64,100 jobs according to September figures released by the ABS.
Despite the slight decrease in the number of unemployed, the strong increase in employment caused the participation rate to rise by 0.1 percentage point to a record high of 67.2 percent.
Mr Hauser said the RBA has taken an independent path when it comes to fighting inflation and would not simply follow the example of the US Federal Reserve or the Bank of England, which have begun their cycle of rate cuts.
“The reason we are not cutting rates at this time compared to other central banks is because inflation is still too high,” he said.