Why interest rates will keep falling in Australia (audio podcast)

Audio episode: In this episode, I reiterate my view that the RBA is likely to continue cutting rates despite remaining on hold in July. The RBA is caught between optics and outcomes.

They know growth is stalling, and the household sector is under real pressure. But they held last week to avoid looking too soft on inflation, while global central banks are still split on timing. It’s a credibility game.

Under the hood, the data says it all. Productivity is dead flat. Real wages aren’t improving. Capex is sluggish. The rate cuts aren’t a matter of if, but when.

They’re holding back to avoid triggering another speculative surge, especially in property, but the underlying economy is screaming for easing.

I’d expect the RBA to follow once the Fed cuts. They don’t want to front-run global easing, but they’ll join once the first move is made. It’s coming.

Peter Esho is an economist and Founder of Flexdoc. He has 20 years of experience in investments and markets.