News
Wealth Pi Fortnightly Economic Snapshot
Interest Rates
As of 28th of May 2025, markets have assigned a 78% probability that the Reserve Bank of Australia will cut the official cash rate from 3.85% to 3.60% at its next meeting on 8 July, following a 0.25% cut in May.
RBA
In May 2025, the RBA cut the cash rate to 3.85% amid easing inflation now within the 2–3% target range, a steady labour market, and weaker-than-expected household consumption, while growing global trade tensions and uncertainty—particularly from recent U.S. tariffs—pose risks to both domestic activity and inflation.
With inflation showing signs of stabilising in the RBA target band of 2-3%, the focus is now on Australia’s GDP and any signs of weakness. Partial data release for Q1 GDP shows construction work done stalling vs expected 0.5% rise with higher costs impacting this growth (borrowing rates are still at restrictive levels with labour and material costs adding to limited margin for profitability). Stable inflation and potentially weak GDP supporting the rise in expectations another rate cut in July sooner than most economists were predicting.
Australian Markets
Australia’s unemployment rate remained steady at 4.1% in April 2025 as employment rose by 89,000 people—driven largely by full-time female employment—while participation increased to 67.1%, and underemployment edged up slightly to 6.0%.
Global Markets
US:
In US, Donald Trump is seriously considering privatizing Fannie Mae and Freddie Mac, which could benefit shareholders but may lead to higher mortgage rates by removing the government guarantee that currently helps keep borrowing costs low.
UK:
In UK, the Bank of England has cut the base rate to 4.25%—its lowest in two years—aiming to support housing market activity and mortgage affordability amid easing inflation, with further rate cuts possible if economic conditions evolve as expected.
RBNZ cut its cash rate on the 28th May as expected to 3.25%.
Property
Regional dwelling values continued to outperform capital cities with a 1.5% quarterly rise to April 2025, but the gap is narrowing as capital city growth rebounds, while Western Australia leads in both property value and rent growth amid easing rental trends and affordability challenges across Australia.
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