Every person and their dog seems to have an opinion on what the next move on interest rates will be. With the Reserve Bank of Australia (RBA) conducting its tightest cycle of interest rate hikes in history between May 2022 and November 2023 to quell rising inflation, many Australians are desperate for the mortgage relief that will come when the bank finally reverses course.
Most of the pundits' opinions on what the RBA's next interest rate move might be are worth just as much as the next… which is probably not much. Even the RBA's old boss, Phillip Lowe, got the call laughably wrong when, a few years ago, he suggested that rates wouldn't rise until 2024. So how can the average commentator hope to obtain a working crystal ball on this matter?
Crystal balls aside, someone whose opinion is probably worth more than most is Commonwealth Bank of Australia (ASX: CBA) CEO Matt Comyn.
Running the nation's largest bank tends to give one a fairly keen insight into the state of the economy, after all.
This morning, CBA reported its latest earnings, covering the full 2024 financial year.
As we covered extensively this morning, these earnings came in better than expected, although they still showed that CBA is struggling to tread water in the current high-interest rate economy. The bank reported rising costs and falling profits, albeit hiking its dividend to a record high at the same time.
Luckily for interest rate enthusiasts, Comyn has followed up on those earnings by giving us his opinion on what the RBA's next interest rate move might be.
CBA boss: RBA's next interest rate move will be a cut
Speaking to ABC's Peter Ryan, here's some of what Comyn had to say on the state of the economy right now and where he and CBA see interest rates heading next:
I am confident about the trajectory that the economy is on [although] many households are finding the current environment very challenging..
The CBA economics team actually believe that there'll be a cut in November, which is against the broader market.
When asked why CBA is pencilling in a contrarian projection of a rate cut in 2024, Comyn pointed to falling household savings, saying "We can see that household savings have reduced substantially over the period, the savings buffers that were built up, particularly over COVID".
Thankfully, Comyn doesn't see the Australian economy tipping into recession as a result of higher rates either, stating that "We don't think that's likely".
No doubt many Australians will be hoping Comyn and his team at CBA are on the money here. But we'll have to wait and see.
