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ANZ boss warns RBA may not cut interest rates until 2025

Interest rates may not fall until the first half of 2025, the CEO of ANZ has warned, contrary to his own economists’ expectations.

Mortgage holders may need to wait until next year to receive interest rate relief, according to ANZ’s chief executive, who also warns another rate hike cannot be ruled out.

CEO Shayne Elliott said the stage three tax cuts could delay interest rate cuts until 2025 because it would “put a lot of money into people’s pockets” and be the equivalent of two interest rate cuts.

This is in contrast to ANZ’s own economists who are forecasting the RBA will start to cut rates in November this year.

ANZ CEO Shayne Elliott
Interest rate cuts may not come until next year if tax cuts push up inflation, the CEO of ANZ has warned. (Source: AAP)

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Speaking to The Australian, Elliott said the central bank would need to wait to see what the inflationary impact of the stage three tax cuts would be.

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“I think the RBA may be looking at where people spend that tax-cut money and the impact,” Elliott said.

“Do they save it or spend it? We don’t know. So I wouldn’t be surprised if the rate cuts were in the first half.”

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Elliott also warned Aussies against completely ruling out the possibility of another interest rate hike.

“I don’t want to be a doomsayer but you can’t rule out that the next move will be an increase. It’s not a zero chance. It’s not the likely case but not impossible,” he said.

Of the other major banks, Commonwealth Bank economists are expecting three interest rate cuts this year, starting in September. Westpac is forecasting two cuts, also kicking off in September.

Like ANZ’s economists, NAB’s team expects there will be one interest rate cut in November this year.

Inflation remained steady at 3.4 per cent in February. The RBA expects inflation will fall to its 2-3 per cent target range in 2025 and reach the midpoint in 2026.

The RBA’s 13 interest rate hikes between May 2022 and November 2023 have added $1,394 per month to the average $615,174 mortgage. That works out to an annual increase of $16,728.

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