An economist from a community-based bank is expecting official interest rates to experience two further reductions in the 2026 financial year due to the healthy state of the Australian economy.
Speaking at the Australian Shareholders’ Association Qld Investor Summit held on the Gold Coast recently, Bendigo Bank chief economist and head of economic and markets research David Robertson noted: “Australia’s economic recovery, and let’s face it we’ve been in three years of a cost-of-living crunch, I think is in pretty good shape.
“So while we are at a different part of the cycle from many of our peers, [we’ve experienced] three RBA (Reserve Bank of Australia) rate cuts already [and] I think we’ve got another two to come.
“The next I expect on Melbourne Cup Day on 4 November and if we get one more rate cut after that, the earliest opportunity for that would be in 2026 on 3 February.
“From a budgeting point of view, that’s as aggressive as the RBA easing cycle is going to be.”
According to Robertson, it is not accurate or appropriate to compare the official domestic interest rate with that of other economies around the world as there were a variety of responses employed to counteract the financial effect of the COVID-19 pandemic.
“Do keep in mind that other countries like New Zealand, Canada and the UK all took their rates to 5 or 5.5 per cent and all went into recession, whereas Australia has managed to deal with the inflation shock without going into recession and without shedding too many jobs,” he explained.
“So we’re the only country [out of that group] that has lower unemployment today at 4.25 per cent than pre-pandemic back in 2019 when it was 5.25 per cent.
“All the other countries had the same thing to deal with, an unexpected pandemic and an unexpected inflation shock, and they’ve all dealt with it in their own way, but all today have higher unemployment than back in in 2019.
“So I think that is a clear example of our [economy’s] performance and one of the reasons that I’m looking for a fairly resilient recovery in our economy over the next 12 to 18 months.”