Here's when AMP says ASX investors can expect an interest rate cut

Will the RBA cut interest rates soon?

| More on:
Green percentage sign with an animated man putting an arrow on top symbolising rising interest rates.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Much to the disappointment of homeowners, on Tuesday, the Reserve Bank of Australia (RBA) decided to keep interest rates on hold at 4.35%.

RBA Governor Michele Bullock highlighted that inflation remains high and appears to believe that cutting interest rates now could stop it from hitting target. She said:

While recent data indicate that inflation is easing, it remains high. The Board expects that it will be some time yet before inflation is sustainably in the target range. The path of interest rates that will best ensure that inflation returns to target in a reasonable timeframe remains uncertain and the Board is not ruling anything in or out.

So, when might interest rates fall? Let's take a look at what the economics team at AMP Ltd (ASX: AMP) is saying.

When will interest rates fall?

As I mentioned here at the weekend, Westpac Banking Corp (ASX: WBC) is currently expecting the first rate cut to take place in September.

The good news for borrowers is that AMP sees scope for a cut to happen sooner than that.

In his weekly report, AMP's chief economist, Dr Shane Oliver, said:

Given the generally slowing but somewhat mixed readings the RBA is likely to sit on its hands still waiting for more confidence "that inflation is moving sustainably towards the target range". We continue to see the RBA gaining that confidence by June and being able implement the first cut then but concede there is a high risk it could be delayed till August.

Significant fiscal stimulus in the May Budget could risk delaying the start of easing but the RBA will probably want to see whether this eventuates or not before starting to cut – which likely rules out a May cut.

So, all being well, homeowners may get some relief from their mortgage repayments later this year if everything goes to plan.

Motley Fool contributor James Mickleboro has positions in Westpac Banking Corporation. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Share Market News

A man has a surprised and relieved expression on his face. as he raises his hands up to his face in response to the high fluctuations in the Galileo share price today
Broker Notes

These ASX 200 shares could rise 20% to 50%

Big returns could be on the cards for owners of these shares according to analysts.

Read more »

rising gold share price represented by a green arrow on piles of gold block
Share Gainers

Here are the top 10 ASX 200 shares today

It was a horrible way to end the trading week today for ASX investors.

Read more »

Piggy bank sinking in water symbolising a record low share price.
52-Week Lows

9 ASX 200 shares tumbling to 52-week lows today

Israel's strike on Iran on Friday dragged several ASX 200 shares to new depths.

Read more »

Female miner smiling at a mine site.
Share Gainers

Up 834% in a year, guess which ASX mining stock is hitting new all-time highs today

The ASX mining stock has gone from strength to strength over the past year.

Read more »

Broker written in white with a man drawing a yellow underline.
Broker Notes

Brokers name 3 ASX shares to buy now

Here's why brokers are feeling bullish about these three shares this week.

Read more »

A male investor wearing a blue shirt looks off to the side with a miffed look on his face as the share price declines.
Share Fallers

Why COG, Karoon Energy, Netwealth, and Pilbara Minerals shares are dropping today

These ASX shares are ending the week deep in the red. But why?

Read more »

Man drawing an upward line on a bar graph symbolising a rising share price.
Share Gainers

Why Fiducian Group, Northern Star, Paradigm, and Santos shares are charging higher

These shares are avoiding the market selloff.

Read more »

Dollar sign in yellow with a red falling arrow in front of a graph, symbolising a falling share price.
Share Market News

Why did the ASX 200 just sink to new 2-month lows on Friday?

It’s been a rocky week for the ASX 200. But why?

Read more »