The head of a domestic fund manager is expecting the official interest rate to be lowered at least twice before the end of the 2025 calendar year and has identified the action as something the share market really needs.
Speaking at the recent Australian Shareholders’ Association Investor Conference 2025 in Sydney, Plato Investment Management managing director Don Hamson told delegates: “I’d expect at least two interest rate cuts this year and maybe it might be three or four.
“That should help stimulate the economy and stimulate the consumer because in the last two or three years we’ve actually gone backwards in terms of dividends in the Australian market.
“It’s been a very soft economy, very slow, but I think we’ve now passed the peak in the interest rate cycle and I think the outlook is starting to look better from our point of view.”
Hamson acknowledged the Trump administration’s policies are what may lead to a greater number of interest rate cuts and warned investors to avoid being too alarmist about the nature of these measures in relation to their stock market expectations.
“Clearly there is a lot of uncertainty and Trump has turned the world upside down, but the reality is his bark is worse than his bite,” he explained.
“If we look at his strategy, it’s always to talk big and then back off and try to put it in a corner.
“So we’ve seen at the moment the actual level of tariffs is quite low so I think equity markets will bounce back. They see through this talk from Trump.”
He said he is still optimistic about 2025 and indicated Trump’s tariff policy could work in this country’s favour.
“I’m relatively bullish about 2025. I think the impact of tariffs means it will be harder to export goods to the US if it puts a 10 per cent tariff on Australia and it might not even be 10 per cent. It might be nothing,” he said.
“But the world is a huge trading pool so if we trade less with the US, maybe we’ll trade more with Canada.”
He acknowledged the indirect impact could be significant for Australia if US tariffs slow down China’s economy as that will negatively affect the iron ore prices that drive 20 per cent of the domestic market’s profits.
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