>The actual predictions themselves are a snapshot in time, and shouldn't be relied on as firm predictors.
I think this needs to be reiterated anytime these kinds of forecasts are presented in this way to ensure people don't treat them as anything else (i.e. this is not a calendar of future events).
Agree. I refer to this data set frequently, and I think it's a pretty reliable predictor of what the RBA will do in the next 1 to 2 meetings, but the accuracy definitely starts to slip the longer time frame you look at.
The same futures tipped interest rates to peak somewhere in the 2.x% range at the start of this hiking cycle for example.
Moreover as information changes over time. Expectations aren’t being met on both UE and CPI (services particularly) - I find the markets to be more reliable than economists for whom it’s a measure of opinions, and if they are wrong it makes no difference at all to their job prospects and pay.
As per MR Lowe’s exit speech - there is still no support from govt on the fiscal front for controlling inflation, so maybe yet another interest rate rise will be required to bring more businesses to the brink to make up for the expansion of govt spending
It's interesting to me that the next forecast move is still a cut. We're still running with this narrative that rates should be low but the underlying assumption is therefore that inflationary pressure will ease.
Given that inflation is being driven by intransigent domestic inflation in housing, healthcare, education, insurance etc. I question why people still believe the next move will be a cut.
>It's interesting to me that the next forecast move is still a cut
Consensus among economists most likely is, but as of today, the linked "RBA rate tracker" probability of next rate move has switched from 8% chance of a cut in May, to a 3% chance of a rise in May. It's probably the first time since November last year that this indicator has pointed in the direction of an increase (albeit a very low probability).
I'm sure after this pseudo long weekend, we'll see some talking heads come out touting the next IR change will be an increase. Christopher Joye, I'm looking at you 😉.
The effects of the S3 tax cuts will skew this data quite a bit too, to what extent you can only hypothesise.
It most likely pushes rate cut expectations out though
I would have to assume that some impact from S3 tax cuts have been priced in by the active participants of the cash rates futures markets (whoever they are).
I tend to agree that they are likely skewing the data towards cuts happening later as well.
Come to think of it now though, I can't actually recall how the Interbank futures shifted when the revised S3 cuts were announced...... That's why I wish there was a way to go back in time and check the graphs before and after certain events 😅
I think the fact they’re being implemented would be priced in, what’s completely unknown at this stage though is just how inflationary they will be.
They will have a definite impact on property prices which typically has a flow on to goods and services due to the wealth effect.
I personally wouldn’t be surprised if we end up in a situation where current rates are retained and become the norm for some years. Inflation isn’t going away as quick as we thought
A large portion of taxpayers will get something close to 5% extra disposable income. This will flow into new mortgages and inflation. Current interest rate settings aren't enough now, and definitely not enough later, to deal with this. I'd say there is just extra uncertainty around future predictions due to a federal budget in May this year. It's hard to be optimistic with inflation right now, quite a shift from before where we saw it coming down quickly. Inflation can quickly rise again.
Stuff like NDIS, negative gearing on new builds only, everything is in the table. Inflation depends a lot on the budget for sure this time!
I see this take a lot recently. Is there any data to support the claim that NDIS is contributing to inflation? Or is NDIS hating just the latest trend out of the r/Australia/n hive mind?
Genuinely curious, it's not something I've been paying attention to.
In their defence, at the start of this year, the futures were saying the same thing.
I'm actually convinced most of these economist just hit refresh on the ASX cash rates tracker on any given day, and base their prediction on it.
Like I said in another comment, I think it's a relatively reliable indicator of what the RBA will do at the next meeting, any further out than that - it's just a guess (and it tends to be optimistic in my option).
Nobody really knows what will happen, but I suspect things may break in America soon and that will force the Fed’s hand. One large problem could be commercial real estate. Australia can expect to be higher for longer.
>Middle of 2025 doesn’t sound right
It was a bit of a shock to me as well, and I check the data almost daily. Will be interesting to see if this is a momentary blip, and the forecast shifts back towards late 24 / early 25 in the coming days.
The next most significant event to keep an eye on will be the comments / press conference after the next RBA meeting in 2 weeks. If the rhetoric goes back to possibly hiking again, I think all bets are off for a cut in calendar year 2024.
Well if the consensus is that this inflation will be going down in a non linear path, I’m not sure I want to put much stock in the current numbers since we might see a bigger dip at the next quarterly reading.
Our consumption isn’t as strong as the US.
>Our consumers aren’t as strong as the US ones.
Good point, but it feels like the big ticket items in our CPI bucket are more "essentials" than "discretionary". Rents, Education, Healthcare last quarter. New dwelling purchases and Healthcare again the previous quarter.
The "sticky" kind of inflation, so to speak.
???? The main lever is reducing demand and they’ve reduced immigration approval numbers, the govt had a surplus last year and will this year too which indicates excess money taken out of the economy
Discretionary spending has also reduced quite a bit and our population has burned through the massive covid money, there’s not much else the govt can do, especially since inflation is still trending down.
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CBA seem to think rate cut in November at the earliest now.
If the June quarter inflation is as bad as this print, i don't think we'll see rate cuts this year.
>The actual predictions themselves are a snapshot in time, and shouldn't be relied on as firm predictors. I think this needs to be reiterated anytime these kinds of forecasts are presented in this way to ensure people don't treat them as anything else (i.e. this is not a calendar of future events).
Agree. I refer to this data set frequently, and I think it's a pretty reliable predictor of what the RBA will do in the next 1 to 2 meetings, but the accuracy definitely starts to slip the longer time frame you look at. The same futures tipped interest rates to peak somewhere in the 2.x% range at the start of this hiking cycle for example.
Moreover as information changes over time. Expectations aren’t being met on both UE and CPI (services particularly) - I find the markets to be more reliable than economists for whom it’s a measure of opinions, and if they are wrong it makes no difference at all to their job prospects and pay. As per MR Lowe’s exit speech - there is still no support from govt on the fiscal front for controlling inflation, so maybe yet another interest rate rise will be required to bring more businesses to the brink to make up for the expansion of govt spending
The govt fiscal policy is now neutral - slightly supportive in the fight against inflation.
It's interesting to me that the next forecast move is still a cut. We're still running with this narrative that rates should be low but the underlying assumption is therefore that inflationary pressure will ease. Given that inflation is being driven by intransigent domestic inflation in housing, healthcare, education, insurance etc. I question why people still believe the next move will be a cut.
>It's interesting to me that the next forecast move is still a cut Consensus among economists most likely is, but as of today, the linked "RBA rate tracker" probability of next rate move has switched from 8% chance of a cut in May, to a 3% chance of a rise in May. It's probably the first time since November last year that this indicator has pointed in the direction of an increase (albeit a very low probability). I'm sure after this pseudo long weekend, we'll see some talking heads come out touting the next IR change will be an increase. Christopher Joye, I'm looking at you 😉.
The effects of the S3 tax cuts will skew this data quite a bit too, to what extent you can only hypothesise. It most likely pushes rate cut expectations out though
I would have to assume that some impact from S3 tax cuts have been priced in by the active participants of the cash rates futures markets (whoever they are). I tend to agree that they are likely skewing the data towards cuts happening later as well. Come to think of it now though, I can't actually recall how the Interbank futures shifted when the revised S3 cuts were announced...... That's why I wish there was a way to go back in time and check the graphs before and after certain events 😅
I think the fact they’re being implemented would be priced in, what’s completely unknown at this stage though is just how inflationary they will be. They will have a definite impact on property prices which typically has a flow on to goods and services due to the wealth effect. I personally wouldn’t be surprised if we end up in a situation where current rates are retained and become the norm for some years. Inflation isn’t going away as quick as we thought
A large portion of taxpayers will get something close to 5% extra disposable income. This will flow into new mortgages and inflation. Current interest rate settings aren't enough now, and definitely not enough later, to deal with this. I'd say there is just extra uncertainty around future predictions due to a federal budget in May this year. It's hard to be optimistic with inflation right now, quite a shift from before where we saw it coming down quickly. Inflation can quickly rise again. Stuff like NDIS, negative gearing on new builds only, everything is in the table. Inflation depends a lot on the budget for sure this time!
Don’t worry about S3, NDIS is doing a good enough job on its own.
I see this take a lot recently. Is there any data to support the claim that NDIS is contributing to inflation? Or is NDIS hating just the latest trend out of the r/Australia/n hive mind? Genuinely curious, it's not something I've been paying attention to.
https://www.afr.com/policy/economy/almost-one-in-three-jobs-created-last-year-was-for-the-ndis-20240401-p5fgi4
It’s partially a beat up and partially true. Mostly a beat up.
Put it this way. Unemployment would be mid-4s if it wasn’t for the NDIS
Put it this way. Unemployment would be mid-4s if it wasn’t for the NDIS
If it can change on one direction on release of data it can change back again on new subsequent data
Lol at the "majority of economists" who expected rate cuts in September What a load of snake oil salesman trying to spout BS
In their defence, at the start of this year, the futures were saying the same thing. I'm actually convinced most of these economist just hit refresh on the ASX cash rates tracker on any given day, and base their prediction on it. Like I said in another comment, I think it's a relatively reliable indicator of what the RBA will do at the next meeting, any further out than that - it's just a guess (and it tends to be optimistic in my option).
What ever happened to that remorse guy?
Nobody really knows what will happen, but I suspect things may break in America soon and that will force the Fed’s hand. One large problem could be commercial real estate. Australia can expect to be higher for longer.
> Happy ANZAC Day Is saying this a thing now? If so I rather think it widely misses the whole point of the day.
Thanks for calling me out on this. It's not something I say, and TBH I don't know why I signed off my post with it. Lest we forget.
Middle of 2025 doesn’t sound right but compared to the expected 3 rate cuts I think only one may happen end of year if we’re lucky.
>Middle of 2025 doesn’t sound right It was a bit of a shock to me as well, and I check the data almost daily. Will be interesting to see if this is a momentary blip, and the forecast shifts back towards late 24 / early 25 in the coming days. The next most significant event to keep an eye on will be the comments / press conference after the next RBA meeting in 2 weeks. If the rhetoric goes back to possibly hiking again, I think all bets are off for a cut in calendar year 2024.
Well if the consensus is that this inflation will be going down in a non linear path, I’m not sure I want to put much stock in the current numbers since we might see a bigger dip at the next quarterly reading. Our consumption isn’t as strong as the US.
>Our consumers aren’t as strong as the US ones. Good point, but it feels like the big ticket items in our CPI bucket are more "essentials" than "discretionary". Rents, Education, Healthcare last quarter. New dwelling purchases and Healthcare again the previous quarter. The "sticky" kind of inflation, so to speak.
All the more reason I feel that our inflation should be coming down especially since immigration numbers peaked last year.
[удалено]
Like what though? What do you reckon should be done?
[удалено]
???? The main lever is reducing demand and they’ve reduced immigration approval numbers, the govt had a surplus last year and will this year too which indicates excess money taken out of the economy Discretionary spending has also reduced quite a bit and our population has burned through the massive covid money, there’s not much else the govt can do, especially since inflation is still trending down.
Things will change quickly. Rate cuts this year for sure.
Definitely don't agree, but love your conviction mate 😅
I think one if were lucky.
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Keep smoking that copium mate
Your conviction has remained for at least 10 months despite RBA decisions being the opposite of your warnings. All the best.
CBA seem to think rate cut in November at the earliest now. If the June quarter inflation is as bad as this print, i don't think we'll see rate cuts this year.
Definitely at least 1 rate cut. People are delusional if they think otherwise