December Observations

Where to next for Interest Rates?

The RBA had its “No Change” party again, maintaining rates at 4.35% post-November. Despite ongoing speculation about potential changes, the economy appears to be adjusting to stringent monetary conditions.

There’s talk in the market about major retailers expressing concerns about consumption and whispers hinting at a potential rate cut in August. Read the detail below around inflation insights to find out more!


Inflation Insights

November’s CPI dynamics brought unexpected shifts, with the overall rate decreasing from 4.9% to 4.3%. Specific sectors, like Rent (7.1%) and Energy (12%), are standing out, driven by supply-side factors such as the energy crisis and housing shortage. Talk about “Rent Control” even the numbers are looking for a place to stay!

While CPI remains above the RBA’s 2-3% target band, taming this inflation challenge is compared to threading a needle in a haystack. Government accounts project a return to the target band in early 2025, with potential downward interest rate adjustments not likely until then. Stay tuned for more economic updates!


Other notable items

  • Bitcoin ETF approval decision is expected in the coming days
  • Australia on track for another surprise surplus given the higher than expected iron ore price
  • Chinese government looks to be easing conditions to support the economy which is slowing
  • New Vic State taxes kick in from 1 January 2024
    • COVID-19 debt — temporary land tax surcharge
    • Absentee owner surcharge rate will increase from 2 per cent to 4 per cent


Upcoming Lodgement Dates for January:

  • 21 January – Lodge and Pay Instalment Activity Statement
  • 28 January – Make Superannuation Contributions by this date