The Reserve Bank of Australia (RBA) will meet tomorrow to make its cash rate decision for November.
Many mortgage-payers are hoping the Reserve Bank will vote for another cut, but following inflation data revealed last week, it looks unlikely.
On Wednesday last week, the Australian Bureau of Statistics (ABS) reported that the Consumer Price Index (CPI) indicator rose 1.3% in the September quarter and 3.2% annually. And it caused a flurry of selling activity which saw the ASX 200 Index nosedive.
The unexpected surge in inflation all-but dashes hopes for a cut this month. Especially with trimmed mean annual inflation – which removes certain volatile items and is the RBA's preferred measure – rising to 3% for the September quarter, up from 2.7% in the June quarter. That was significantly above the RBA's prior forecast of a 2.6% increase.
Now, economists are near-unanimous that rates will stay locked at 3.6% for the foreseeable future.
Commonwealth Bank of Australia (ASX: CBA) thinks the RBA will keep the cash rate on hold tomorrow and no longer expects that ASX 200 investors will see the RBA cut rates in February 2026.
Goldman Sachs economist Andrew Boak, who had been forecasting an RBA rate cut in November and February, now believes rate relief is off the menu for the foreseeable future.
Westpac Banking Corp (ASX: WBC) chief economist Luci Ellis also believes the increase in inflation dims the hope of rate cuts in 2025.
National Australia Bank Ltd (ASX: NAB) thinks we'll need to wait until May next year before we see any more cash rate relief.
Stocks that could benefit from another RBA hold decision
The good news is, real estate investment trust stocks (REITs) don't need cash rate cuts to perform strongly. They benefit from stability.
As stocksdownunder.com explains, when the market shifts from "rates are definitely coming down soon" to "rates will hold steady here for the foreseeable future", it removes uncertainty for property stocks.
REITs can refinance their debt without concern that they need to time the market and property valuations stop compressing.
And perhaps most importantly, dividend yields start looking genuinely attractive again when investors know the capital base isn't going to erode further.
Here are four ASX 200-listed REITs which could benefit from another hold decision tomorrow.
Goodman Group (ASX: GMG)
Goodman Group is an integrated property group with operations in 14 countries. It specialises in industrial and commercial properties, owning, developing, and managing a global portfolio worth around $80 billion.
Today, it is the largest real estate investment trust (REIT) in Australia, which makes GMG shares a favourite of listed property enthusiasts. Its operations take in North America, Europe, the UK, China, Japan, Brazil, Australia, and New Zealand.
Ahead of the ASX open on Monday, Goodman shares are $33.03 a piece.
Scentre Group (ASX: SCG)
Scentre Group owns and operates a portfolio of 42 Westfield shopping malls, 37 in Australia and five in New Zealand. The company owns the majority of the Australian and New Zealand's top five retail destinations, with the group's ownership interests totalling around $35 billion. Its retail assets under management are worth more than $51 billion.
The company says its diversified revenue base reduces exposure to any single shopping centre or retailer. As at 31 December 2022, no anchor retailer contributed more than 3% of rental income, and no specialty retailer contributed more than 2%. Its 10 highest-valued retail shopping centres represented 57% of its portfolio value.
At the time of writing, Scentre Group shares are $4.07 each.
Stockland (ASX: SGP)
Stockland is a diversified property development company. The company is one of Australia's largest residential land and housing developers and its business segment generates about a third of the group's funds from operations. Nearly two-thirds comes from commercial property, mostly retail. It also has a land-lease business, although the company's business mix is evolving.
At the time of writing, its shares are $6.31 a piece.
Mirvac Group (ASX: MGR)
Mirvac Group is a diversified property group with interests across residential and master-planned communities, office and industrial, retail, and build-to-rent sectors. The company has around $35 billion in assets currently under management, mainly in Sydney, Melbourne, Brisbane, and Perth.
Around 80% of Mirvac's earnings come from a predictable commercial property portfolio, more than half of which is offices and another quarter retail. The company also holds a small industrial portfolio and a fledgling build-to-rent residential portfolio.
At the time of writing, its shares are $2.30 each.
