Westpac CEO reveals when the RBA could cut interest rates
Westpac's boss has revealed when he believes the Reserve Bank of Australia (RBA) will start to look at cutting interest rates. The RBA will reveal today what interest rates will be following a two-day meeting and it is largely tipped to keep the cash rate on hold at the 12-year high of 4.35 per cent.
Some are predicting there could be a rate rise later this year if inflation isn't dealt with and many homeowners are wondering when rates will start to fall. The chief executive of Australia's second-largest bank said mortgage holders will only start getting relief when the unemployment rate goes up.
“We haven’t we haven’t seen any major change in unemployment," he told The Australian. "At the macro level, the economy is actually very resilient but at the tail, those people that are doing it tough are really doing a tough and they’re mainly young and lower income earners."
Follow the Yahoo Finance live blog here for expert analysis and breaking news as the Reserve Bank decides the cash rate.
Are you struggling with your mortgage? Email stew.perrie@yahooinc.com
King said unemployment, which is currently sitting at 3.9 per cent, would have to rise into the mid-4s before the RBA moves the cash rate down because it's closely tied to inflation.
He doesn't see a rate cut until at least 2025.
The most recent Consumer Price Index (CPI) figures showed annual headline inflation sat at 3.6 per cent, which was lower than the previous quarter's 4.1 per cent, but higher than the RBA's 3.5 per cent prediction for the first three months of 2024.
The RBA has an inflation target of 2.5 per cent by 2026.
Could interest rates go up in 2024?
Former RBA governor Philip Lowe warned this week that another interest rate rise this year was not completely out of the question if inflation didn't continue to fall.
"I understand that most people hope the peak has been reached and it may well have, but it might not have," he told the Australian Financial Review.
"People have been asking me [about rates] through the course of the year and I've been reminding them there is still two-way risk."
RELATED
Markets ascribed just a 10 per cent chance that the RBA would deliver a shock rate hike at today's meeting, however traders have bolstered their bets of a resumption in tightening by Christmas, assigning a 44 per cent chance of a hike by December.
