Latest news with #WarrenHogan
Yahoo
08-07-2025
- Business
- Yahoo
RBA's interest rates hold sparks warning for mortgage holders: 'No sure thing'
The Reserve Bank of Australia (RBA) defied expectations by keeping the cash rate on hold at 3.85 per cent at today's meeting. While the central bank has signalled an August interest rate cut is on the table, a top economist has warned borrowers not to expect more after that. RBA governor Michele Bullock said she understood households had expected an interest rate cut today, but the board had decided to 'wait a few weeks' to confirm inflation was on track. Provided things pan out as expected, she said there would be 'an easing cycle coming'. Judo Bank chief economist Warren Hogan told Yahoo Finance an interest rate cut had been a 'slam dunk' in terms of market pricing, with around 90 per cent chance of a cut priced in. RELATED RBA holds interest rates at 3.85 per cent in shock decision for millions Commonwealth Bank, Westpac reveal major payment change for millions of customers CBA, NAB, ANZ reveal $200,000 move borrowers making after RBA interest rate cuts 'Although the governor's conference suggests that they're still eying off a cut in August, I think it is a bit of a signal that a series of rate cuts from here is no sure thing,' he said. Hogan said the RBA was signalling that market expectations of three or four interest rate cuts were not aligned with their current thinking. 'The market's probably getting a little bit ahead of itself in pricing in four,' he said. 'My view is we've probably got a good chance of a move in August and that's also a good chance of being the last cut. 'Rates will probably stay where they are, which is a broadly neutral position from a policy setting point of view that is an RBA cash rate of about 3.5 per cent.' Hogan noted the economy was in a recovery phase, but it was very gradual. 'The problem for the RBA is if the economy does start recovering while we've got this elevated business cost, the pressure on margins and profits, then businesses may be in a position to start passing those costs through for the course of the next year,' he told Yahoo Finance. 'That ends up pushing inflation up and that would then bring rate hikes back into play.' While the fall in inflation over the last year has given the RBA confidence to do the first few rate cuts and potentially one in August, Hogan said the next big move in rates would be determined by the next big move in the economy, and this was 'not at all clear'. AMP chief economist Shane Oliver had been expecting a 0.25 per cent cut today and said the bank continued to see the RBA cutting the cash rate to 2.85 per cent but a bit more slowly. "While we were wrong in our expectations for a cut in July, and the RBA is proving to be even more gradual than we had come to expect, we continue to see further rate cuts — as we see economic growth picking up more slowly than the RBA is forecasting, underlying inflation is likely to be confirmed around the 2.5 per cent target and monetary policy remains tight," Oliver said. AMP expects 0.25 per cent rate cuts in August, November, February and May. The RBA decision was not unanimous, with the board publishing an unattributed record of votes in the post-meeting statement for the first time. Today's decision was made with six in favour of a hold and three against. 'The signal today is that while the majority have voted for this outcome, there are those who thought that there should be a cut, meaning we're close,' Hogan said. Hogan said he understood why the RBA wanted to keep the votes unattributed so there was no lobbying, but he has called for more information to be available if records of votes are published. 'I would urge them to say when there are votes against the decision, what they would have wanted,' he said.
Sky News AU
07-07-2025
- Business
- Sky News AU
Future rates cuts not ‘a done deal' after Reserve Bank of Australia's July meeting, Judo Bank's Warren Hogan predicts
The Reserve Bank of Australia may not go on a cutting spree after its Tuesday meeting - where the central bank is widely tipped to deliver the third cut this year - a leading economist has predicted. Money markets are pricing in a 95 per cent chance of the central bank cutting rates on Tuesday to bring the cash rate down to 3.6 per cent. The rate cut comes as trimmed mean inflation – the RBA's preferred measure, which examines the middle 70 per cent of price changes – has fallen well within the central bank's target band. While a rate cut on Tuesday is all but locked in, there is no guarantee the RBA will continue cutting, Judo Bank's chief economist Warren Hogan has warned. 'There's still a lot of uncertainty out there,' Mr Hogan said. 'The RBA was very worried about what tariffs will do to the economy and the risk they pose. 'Although that hasn't gone away, we know markets have moved on and are now at record highs … and property markets here are at record highs. 'I think the RBA has got to be very careful once they get policy down to about three and a half (per cent) after the cut this week. 'After that, I don't think it's a done deal we get more rate cuts despite market prices.' If the RBA cuts rates on Tuesday, it will be the first series of consecutive cuts since the central bank delivered emergency financial relief in March 2020. However, another cut after the July call is not set in stone as the RBA looks towards setting a terminal rate, Mr Hogan said. 'I don't think August is a slam dunk as the market expects tomorrow to be,' he said. 'The real risk tomorrow is obviously a less concerned RBA and, of course, the big risk is they don't move at all. 'I think that's pretty unlikely because I think they're happy to get that cash rate down to what they're thinking is neutral - about three and a half (per cent).' Every major bank is now predicting the RBA will cut rates on Tuesday. ANZ was holding out on a prediction of no cut until August, but changed last week amid data showing retail sales continued to be soft. Research from said households with a $1m home loan will save more than $450 each month compared to the beginning of the year if the Reserve Bank of Australia delivers another rate cut on Tuesday. A household with a $600,000 home loan will save $273 per month, while those with an $800,000 loan will save $364. The array of cuts for Aussie households follows the RBA holding the cash rate at 4.35 per cent for almost a year and a half to stamp out post-pandemic inflation.
Sky News AU
03-07-2025
- Business
- Sky News AU
Labor accused of ‘chopping and changing' superannuation system
Judo Bank Economic Advisor Warren Hogan says Labor's proposed superannuation tax reflects the issue of the government's 'credibility and trust'. 'This is changing the rules, it is a reflection of a range of concerns about super and the current government finances,' Mr Hogan told Sky News host Danica De Giorgio. 'This could change the way Australians think about their super going forward if it is this vulnerable to being chopped and changed by each government that comes through.'
Yahoo
10-06-2025
- Business
- Yahoo
Major RBA interest rate call set to give homeowners $250 per month win for 2025
Financial markets are becoming near certain the Reserve Bank of Australia (RBA) will cut interest rates next month. The Board will meet in early July to decide whether to hike, hold or drop the cash rate from its current level of 3.85 per cent. Interest rates have been cut twice already in February and May, giving homeowners roughly $168 extra in their pockets per month. But the ASX 30 Day Interbank Cash Rate Futures, which looks at the likelihood of interest rate movements, said there is a near 90 per cent chance of another rate cut in a few weeks. That's up from a 59 per cent chance at the end of May. Economist's jumbo $128 RBA interest rate prediction in weeks Rare $1 coin worth 10 times more due to 'unfortunate' detail Major Coles move to take on Chemist Warehouse, Bunnings, Amazon While inflation is in the RBA's target zone, the rest of the economy is struggling. The Australian Bureau of Statistics (ABS) revealed last week economic activity had grown just 0.2 per cent in the March quarter, down from 0.6 per cent in the December quarter. Per capita, GDP went backwards again and was down 0.2 per cent in the quarter and 0.4 per cent for the year. The RBA had forecast annual GDP growth of 1.8 per cent by the end of the June data released on Thursday found consumer spending rose by only 0.1 per cent in April. Employment numbers came out a day after this and showed the number of jobs across the economy had dropped 0.2 per cent in the March quarter to 16.3 million. Experts believe these figures have strengthened the case for another interest rate cut of 25 basis points to 3.60 per cent. Slashing the cash rate could help increase consumer spending and lift this lagging economic activity. Commonwealth Bank senior economist Stephen Wu said while the bank has tipped August to be the next chance of a cut, this new data has made July a "live" option. If the RBA cut rates again by 0.25 per cent, a person with a 30-year $600,000 loan and 6 per cent interest rate could save $82 per month. If you combine the other two rate cuts from this year, that would be a monthly saving of $250. Economist Warren Hogan has called on the RBA to deliver a jumbo rate cut next month of 0.35 per cent. That would be a saving of an extra $37 a month, compared to a standard 25 basis point cut. A poll of more than 11,600 Yahoo Finance readers found 67 per cent of homeowners would need about four rate cuts to feel financially secure. This comes after the cash rate was hiked more than a dozen times from May 2022 to the end of 2023, where it remained on hold until the February 2025 meeting. It depends on who you ask, but Commonwealth Bank, NAB, ANZ, and Westpac have predicted there could be two to three more rate cuts this year alone. That could bring the cash rate down as low as 3.10 per cent by the end of 2025. At least four in five economists believe there will be at least three interest rate cuts between now and December. AMP chief economist Shane Oliver said more mortgage relief is likely to keep flowing until Australia's economic activity improves. 'It's looking increasingly likely we will get a July cut," he said. "Our base case had been August, November and then February for cuts. "But what these numbers are telling us is that it could come earlier and rates could go lower, i.e. we get a cut in July potentially, again in August and then November, and then maybe one more in February next year."Sign in to access your portfolio
Yahoo
09-06-2025
- Business
- Yahoo
Economist's jumbo $128 RBA interest rate prediction in weeks: 'No need to wait'
A top economist has called on the Reserve Bank of Australia (RBA) to deliver a jumbo cash rate cut in July. Economic growth has been weak, and Australian consumers are continuing to be 'cautious' with their spending, leading to an "agonisingly gradual recovery" in the private sector economy. EQ managing director Warren Hogan has called on the central bank to 'act decisively' at its next meeting and make an 'uncharacteristic' 35 basis point rate cut. This is bigger than the standard 25 basis point cut mortgage holders received in February and May. 'At this stage, the RBA seems to think a neutral cash rate is about 3.5 per cent. There is no reason to wait,' Hogan, who has previously been a cautious voice about rate relief, wrote in an opinion piece for the Australian Financial Review. RELATED Australian dollar rebounds in 'unusual' sign for RBA ahead of interest rates decision Major Coles move to take on Chemist Warehouse, Bunnings, Amazon Centrelink payment change happening next week: 'Will increase' A 35 basis point cut would lower repayments on the average $600,000 home loan with 25 years remaining by $128 per month. That would be a saving of an extra $37 a month, compared to a standard 25 basis point cut. Economist and Yahoo Finance contributor Stephen Koukoulas has also called for a supersized interest rate cut at the RBA's next meeting. He said the RBA needs to "aggressively" move the cash rate to a neutral, or accommodative, position. 'We do need to see the RBA cutting 50 [basis points] at the July meeting, playing a bit of catch up for its errors previously, getting the cash rate down to 3.35 per cent and giving the economy a chance to get a breather, to grow a bit,' he said. A neutral rate is one that is neither stimulatory nor contractionary. There is no set definition for what it is, but it is thought to be in the low 3 per cent region. The Australian economy grew just 0.2 per cent in the March quarter and 1.3 per cent in annual terms. Koukoulas warned that the longer it takes to get the cash rate to a neutral level, the 'worse the economy will be'. 'It needs to get there sooner rather than later, otherwise 2026 is going to be a really tough year for the economy,' he said. Hogan said that despite a boost to real disposable incomes, Australian consumers were 'unwilling to loosen the purse strings in a meaningful way', preferring to save rather than spend their extra income. "The household saving ratio jumped above 5 per cent, back to what was normal prior to the pandemic. It could go higher, particularly as the government seeks to tax superannuation incomes at a higher rate in the future," he said. Businesses are also slowing the pace of capital deployment and experiencing a squeeze on profits from cost growth, but are unable to pass this on to customers. 'Either businesses start passing on costs, and we get higher inflation, or business profits continue to be squeezed, and profits soon contract,' Hogan warned. 'Business will retrench their investment plans; many businesses will fail. This risks an entrenched stagnation, hauntingly similar to Japan's economy of the 21st century.' Financial markets expect the RBA will deliver another three 25 basis point cuts to the cash rate in 2025, taking it to 3.10 per cent by the end of the in retrieving data Sign in to access your portfolio Error in retrieving data
