Next week is a big one for homeowners, with the Reserve Bank of Australia (RBA) gathering the troops once again to decide on interest rates.
As readers may have noticed this year, the outlook for rates can change on a weekly basis.
A week ago, the market had ruled out a rate cut at November's meeting but will last week's inflation data have changed anything.
Let's have a look at what economists are expecting the central bank to do at Tuesday's gathering.
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Will the RBA cut interest rates next week?
Unfortunately, last week's inflation data was not kind to borrowers (or investors).
Following the release of the data, the market pushed back its expectations for interest rate cuts and ASX shares immediately tumbled deep into the red.
But has the economics team at Westpac Banking Corp (ASX: WBC) changed its expectations?
It has been running the rule over the data and has given its verdict on next week's meeting.
According to Westpac Weekly, the bank's chief economist, Luci Ellis, believes there will be no movement at the RBA's November and December meetings, but still expects a 25 basis point cut in February. She said:
Following this week's inflation data for the September quarter, we affirm our call for the Reserve Bank Board to leave the cash rate unchanged at its meeting next week. We continue to expect rates to remain unchanged this year, and that the rate-cutting phase will begin with a 25 basis point cut at the February 2025 meeting.
However, Saxo's Asia Pacific chief investment strategist, Charu Chanana, sees scope for interest rates to be cut in December as an early Christmas present to borrowers. Though, a lot could depend on what happens across the Pacific in the United States. Ms Chanana said:
The Q3 CPI print was just right to support the RBA's stance – neither too cool to prompt earlier rate cuts nor too hot to provide further pushback to RBA rate cut expectations. A rate cut from the RBA still remains likely in December if the US Fed's cuts are more aggressive, or if the Australian consumer weakens faster than expected.
Could it be as late as June?
The market doesn't agree with either Saxo or Westpac based on where the ASX 30 Day Interbank Cash Rate Futures contract is trading.
According to the latest contract, the market is fully pricing in a cut by June 2025, with only a small chance of one taking place in February.
Time will tell which is the correct call. But the main thing is that some relief should be on the way for borrowers in the not so distant future.
