Westpac’s economics team – which now has former Reserve Bank heavy-hitter Luci Ellis at the helm – expects the central bank to keep the official cash rate steady at 4.1 per cent until June next year.After that, they expect the RBA to start cutting interest rates, and say the official cash rate is likely to fall to 3.1 per cent by June 2025.
And they come at a time when investors are becoming increasingly concerned that the steep jump in global oil prices could fuel inflationary pressures, forcing central banks to resume their monetary tightening.expressed concern that the escalating conflict in the Middle East could keep oil prices and inflation higher for longer, causing people to adjust their expectations.
The economists say the US 10-year bond yield – regarded as a global benchmark – is likely to drop from 4.9 per cent at present to 4.6 per cent by the end of this year. “The constant cash-flow hits from interest rate rises may have stopped for many but consumers remain on high alert for further rate rises,” it says.At the same time, risk aversion – particularly for middle-income, middle-aged and mortgage-belt consumers – remains close to record highs.
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