News
Wealth Pi Fortnightly Economic Snapshot
Interest Rates
As of November 1, 2024, the ASX RBA Rate Indicator shows a 5% probability of a 0.25% rate cut at the upcoming November RBA meeting, with the current cash rate held at 4.35% as market expectations remain predominantly for no change for next 6 months and that the next move will be a cut.
RBA
The Reserve Bank of Australia decided to keep the cash rate unchanged at 4.35%, emphasizing the need for restrictive policy even though the inflation figure fell to 2.8%. The inflation figure was impacted by the one-off energy rebate and is expected to bounce above 3% again with the RBA forecasting still forecasting inflationary pressure through 2025 with economic conditions, fiscal spending, immigration and labour market strength remaining.
Australian Markets
Australia’s latest Consumer Price Index (CPI) data, released by the Australian Bureau of Statistics on October 30, 2024, shows a modest increase in inflation. The CPI rose 0.2% for the September quarter, bringing the annual inflation rate to 2.8%, with the energy rebate and lower petrol prices main contributors to the lower annual rate. Most economists expect this figure to bounce back to plus 3% which will keep pressure on the RBA to remain steady on the cash rate.
Retail sales remained stable in September, signalling cautious consumer spending. While certain discretionary spending areas saw slight growth, essentials drove most of the retail performance, showing how consumers are adjusting to inflation and interest rates.
Global Markets
US:
In the US market, a recent survey by StorageUnits.com reveals that one in three Americans are contemplating relocating if their preferred presidential candidate loses, with differing motivations—Harris supporters fear restrictions on progressive rights and racial inequality, while Trump supporters cite inflation and lax border policies; however, only a small percentage (6%) are likely to follow through, as financial constraints and community ties hold most people back.
The US Federal reserve cut rates by another 25 bp, with Federal Reserve chairman Jerome Powell stating the US economy remains strong, and although inflation has eased substantially, it remains elevated. And he noted that the election result will have no impact on policy.
UK:
In the UK market, the Autumn Budget increases stamp duty on second homes to 5%, retains current relief for first-time buyers and home movers until April 2025, raises Capital Gains Tax, allocates £500 million for affordable housing, and includes £1 billion for removing dangerous cladding from high-rise buildings.
Property
In September 2024, the total value of new housing loans in Australia fell by 0.3% to $30.2 billion, with investor loans down 1.0% but still 29.5% higher than a year ago, while owner-occupier loans rose slightly and first-home buyer loans declined.
Sydney home values declined by 0.1% in October as the national market cools, with CoreLogic reporting a 0.3% national rise driven by mid-sized capitals like Perth (+1.4%), though annual growth in national home values has eased to 6.0%, and listings and median days on market have increased, particularly in higher-priced segments.
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