Westpac CEO shares cash rate forecast that can mean big savings for Aussies
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In a climate where the cost of living seems to be on an endless ascent, Westpac Group CEO Peter King has given Australians a glimmer of hope.
In a recent parliamentary review, King made a bold prediction that could see many Aussies breathing a sigh of relief as they look towards a more financially stable future.
The Westpac CEO has forecasted that the cash rate, which is a critical factor influencing the interest rates on loans and savings, will see a significant reduction come February 2025.
According to King, his economic team anticipated the commencement of a 'cutting cycle' at the beginning of next year, with the cash rate expected to settle in the 'low three per cent range.'
This would be a cumulative cut of 100 basis points from the current rate of 4.35 per cent.
This prediction comes as a beacon of hope amidst the cost of living crisis that has been tightening its grip on Australian households.
The recent drop in the consumer price index for the June quarter to 3.8 per cent, which is within a per cent of the target, has already sparked a shred of optimism.
During the hearing, King provided a snapshot of the current economic landscape, noting that approximately 19,000 Westpac customers were on personalised hardship arrangements, which is about 0.6 per cent of the bank’s 3.1 million customers with a debt product.
‘From the macro perspective, the Australian economy is proving resilient compared to global peers,’ King said.
'Australia's key economic indicators remain stable, while we’ve seen low economic growth and slightly higher unemployment, this performance should be viewed in the context of global conditions which are more challenging.’
‘Westpac’s view is the Australian economy is well placed for a return to higher levels of growth when pressures ease.’
King also highlighted that the bank could assist the economy and its customers in navigating the cost-of-living challenges, noting that total loan stress had risen by a mere 1.4 per cent, which was lower than expected.
Moreover, more than 78 per cent of mortgage customers were ahead on their repayments, a sign of the proactive financial management by Australian households.
‘Australian households are making difficult spending choices to balance their budgets,’ King said.
‘Last September, we launched new tools in our banking app to help customers track and manage their expenses, as well as find potential savings.’
‘More than half a million customers are using these features.’
Additionally, King shared that Westpac has invested over $100 million in the past two years to combat scammers, with scam losses decreasing by 30 per cent year on year.
However, it's important to note that not all economic experts share the same optimism.
Independent economist Warren Hogan expressed concern, pointing out that the recent drop in inflation was partly due to artificial price manipulation from the Albanese government's cost of living handouts.
He warned that the Reserve Bank of Australia (RBA) would remain on 'high alert' unless it saw evidence that underlying pressure on prices was easing.
This cautionary stance was echoed by RBA Governor Michele Bullock, who stated that talk of a rate cut was 'premature' despite the downward trend in inflation.
How are you managing your finances amidst the cost of living crisis? Have you found any strategies particularly effective in stretching your dollar further?share your thoughts with us in the comments below!
In a recent parliamentary review, King made a bold prediction that could see many Aussies breathing a sigh of relief as they look towards a more financially stable future.
The Westpac CEO has forecasted that the cash rate, which is a critical factor influencing the interest rates on loans and savings, will see a significant reduction come February 2025.
According to King, his economic team anticipated the commencement of a 'cutting cycle' at the beginning of next year, with the cash rate expected to settle in the 'low three per cent range.'
This would be a cumulative cut of 100 basis points from the current rate of 4.35 per cent.
Westpac CEO has forecasted that the cash rate would significantly reduce by February 2025. Credit: Shutterstock
This prediction comes as a beacon of hope amidst the cost of living crisis that has been tightening its grip on Australian households.
The recent drop in the consumer price index for the June quarter to 3.8 per cent, which is within a per cent of the target, has already sparked a shred of optimism.
During the hearing, King provided a snapshot of the current economic landscape, noting that approximately 19,000 Westpac customers were on personalised hardship arrangements, which is about 0.6 per cent of the bank’s 3.1 million customers with a debt product.
‘From the macro perspective, the Australian economy is proving resilient compared to global peers,’ King said.
'Australia's key economic indicators remain stable, while we’ve seen low economic growth and slightly higher unemployment, this performance should be viewed in the context of global conditions which are more challenging.’
‘Westpac’s view is the Australian economy is well placed for a return to higher levels of growth when pressures ease.’
King also highlighted that the bank could assist the economy and its customers in navigating the cost-of-living challenges, noting that total loan stress had risen by a mere 1.4 per cent, which was lower than expected.
Moreover, more than 78 per cent of mortgage customers were ahead on their repayments, a sign of the proactive financial management by Australian households.
‘Australian households are making difficult spending choices to balance their budgets,’ King said.
‘Last September, we launched new tools in our banking app to help customers track and manage their expenses, as well as find potential savings.’
‘More than half a million customers are using these features.’
Additionally, King shared that Westpac has invested over $100 million in the past two years to combat scammers, with scam losses decreasing by 30 per cent year on year.
However, it's important to note that not all economic experts share the same optimism.
Independent economist Warren Hogan expressed concern, pointing out that the recent drop in inflation was partly due to artificial price manipulation from the Albanese government's cost of living handouts.
He warned that the Reserve Bank of Australia (RBA) would remain on 'high alert' unless it saw evidence that underlying pressure on prices was easing.
This cautionary stance was echoed by RBA Governor Michele Bullock, who stated that talk of a rate cut was 'premature' despite the downward trend in inflation.
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