18 Questions
What is the expected total reduction in monthly payments on a $600,000 variable-rate mortgage by the end of 2025?
$335
What percentage of forecasters expect higher rates by mid next year?
7%
What is the current cash rate according to the forecasters?
4.35%
How many forecasters expect no change in interest rates by mid next year?
4
What is the expected reduction in the cash rate by June next year?
0.35 points
What is the expected further cut in the cash rate by the end of 2025?
0.3 points
What is the main reason for the forecasted cuts in interest rates?
Inflation not falling fast enough
How many institutions are represented in the forecasters' panel?
22
What is the expected rate of inflation by the end of this year?
3.3%
What is the expected rate of unemployment by the end of this year?
4.4%
What is the expected growth rate of Australia's economy by the end of next year?
2%
What is the expected rate of wages growth over the year ahead?
3.5%
What is the expected rate of consumer spending growth over the next 12 months?
1.7%
What is the expected rate of home price growth in Sydney over the next year?
5%
What is the expected rate of non-mining business investment growth over the next year?
5.2%
What is the expected growth rate of China's economy?
5%
What is the expected growth rate of the US economy?
2.4%
What is the expected growth rate of the Australian share market over the next year?
5.6%
Study Notes
Interest Rates
- Top economic forecasters expect the Reserve Bank to start cutting interest rates by March next year, with a 0.35 point cut by June.
- A 0.35 point cut would take $125 off the monthly cost of servicing a $600,000 variable-rate mortgage.
- A further cut of 0.3 points is expected by the end of 2025, taking the cash rate down from 4.35% to 3.75%.
- A total cut of $335 in monthly payments on a $600,000 mortgage is expected by the end of 2025.
Inflation
- The panel expects inflation to be back within the Reserve Bank's 2-3% target band by June next year.
- Inflation is expected to be 3.3% by the end of this year.
- Twelve of the panel expect inflation to climb further when the official figures are released at the end of this month.
- All expect inflation to be lower by the end of the financial year than it is today.
Wages Growth
- Wages growth is expected to fall from 4% to 3.5% over the year ahead, contributing to downward pressure on inflation.
- Wages growth is expected to moderate further, to 3.2%, in 2025-26.
- Real wages are expected to produce gains due to wages growth remaining higher than prices growth.
Unemployment
- The panel expects Australia's unemployment rate to climb steadily from 4% to 4.4%.
- The increase in unemployment rate is expected to have a bigger effect on pay packets.
Economic Growth
- Australia's economic growth is expected to climb from 1.1% to 1.3% by the end of this year and to 2% by the end of next year.
- The panel expects China's economic growth to slip from 5.3% to 5%, and US growth to slip from 2.9% to 2.4%.
Housing Market
- Home prices are expected to continue to climb, notwithstanding economic weakness.
- Sydney prices are expected to increase a further 5% in the year ahead, and Melbourne prices are expected to rise a further 2.8%.
- Rapid population growth, decline in household size, and low supply of new homes are contributing to the rise in home prices.
Business Investment
- Non-mining business investment is expected to continue to climb in the year ahead, by 5.2%.
Economic forecasters predict the Reserve Bank of Australia to cut interest rates, affecting variable-rate mortgages. This quiz assesses your understanding of the expected changes.
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