Economist Richard Holden believes the RBA won’t be cutting interest rates until at least 2026. (Source: UNSW/Getty)
Two experts believe Aussie homeowners won’t get any mortgage relief until at least 2026. The Reserve Bank of Australia (RBA) decided to hold interest rates at the 13-year high of 4.35 per cent following its two-day September meeting.
Not a single expert from Finder’s research was tipping a cut from this meeting and the overwhelming majority (15) believe the first round of cuts will happen in February 2025. But Richard Holden, Professor of Economics at UNSW Business School, told Yahoo Finance homeowners should expect to hold their breath longer — much longer.
“We’re not going to solve this inflation problem by cutting rates. We’re going to make it worse,” he said.
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He and Malcolm Wood, Ord Minnett’s head of institutional research, reckon the first rate cut won’t come until sometime in 2026.
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The RBA has been insistent that inflation has to come into the 2-3 per cent range before rates should be cut.
Governor Michele Bullock said a lot of work needs to be done to get inflation down and all but ruled out a rate cut this year.
Will you be forced to sell your home if the RBA doesn’t cut rates this year? Email stew.perrie@yahooinc.com
At the post-meeting press conference, Bullock said the bank isn’t convinced inflation is moving in the direction it needs for a cut.
“The board needs to be confident that inflation is moving sustainably towards the target before any decisions are made about a reduction in interest rates, so we really need to see progress on underlying inflation coming back down toward the target,” she said.
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Where is inflation at the moment?
Data from the Australian Bureau of Statistics (ABS) shows inflation has fallen dramatically since the 2022 peak of 7.8 per cent.
On Wednesday, new figures revealed it dropped to its lowest point in nearly three years to just 2.7 per cent in the 12 months to August, which is down from 3.5 per cent in July.
But a big factor in that fall are the state and federal electricity subsidies handed out after July 1.
Holden said it’s “misleading” to focus on headline inflation because it can be swayed by things like government handouts.
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He said the number to keep your eyes on is trimmed inflation, which is also called core inflation or underlying inflation.
This “smooths out the impact of temporary or irregular price changes” like from subsidies and excludes the top and bottom 15 per cent of price changes to give a more accurate reflection of what’s going on in Australia’s economy. The economist said that number is much harder to move.
“Underlying inflation is a long game,” he told Yahoo Finance.
The RBA also noted that trimmed inflation has been particularly sticky over the past few months.
“Our current forecasts do not see inflation returning sustainably to target until 2026,” it said in its September meeting notes.
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“In year-ended terms, underlying inflation has been above the midpoint of the target for 11 consecutive quarters and has fallen very little over the past year.”
Trimmed inflation came in at 3.4 per cent for August, which is still a considerable drop from the 3.8 per cent in July.
Economist and Yahoo Finance contributor Stephen Koukoulas has argued the RBA should feel comfortable cutting interest rates soon based on headline inflation.
“The RBA is refusing to cut interest rates because it is guessing that the step lower in inflation in August will be temporary, a call that is based on faith not facts,” he wrote.
“In the end, the markets embraced the low inflation result and yet again discounted the RBA view of the economy by pricing in a better than even chance of a 25 basis point interest rate cut before the end of 2024 and a total of 125 basis points of interest rate cuts by the end of 2025.”
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But what about other countries cutting their interest rates?
The US Federal Reserve announced last week it was finally reducing its interest rates from a 23-year high.
In a near-unanimous decision, the rate was slashed by 0.5 percentage points to a range of 4.75 to 5 per cent.
It was the first rate cut since 2020 and experts are predicting there will be two more rate cuts by Christmas, four more cuts in 2025 and twice again in 2026.
Inflation peaked in the US in June 2022 at 9.1 per cent and is now at 2.5 per cent.
Finder spoke to dozens of experts about when they think the RBA will cut interest rates. (Source: Finder)
The US’s move brought it in line with other major nations including the European Union, the UK, Canada, New Zealand, Denmark, Switzerland, China, and many others.
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Federal Reserve Chairman Jerome Powell said waiting longer to reduce the federal funds rate compared to other nations “really paid dividends” as it allowed policymakers to get more comfortable about the downward path of inflation.
Holden said Australia will likely have to follow a similar path.
“It’s a real shame that we didn’t do what the US and the UK and Canada and Europe and New Zealand did, which was take our medicine early on, raise rates more aggressively, deal with the problem, not be so lavish with government spending,” he explained to Yahoo Finance.
“You can see the fruits of that… look at America… that’s the story of what we should have done, and we haven’t done it, and we’re all paying the price for it.”
When do the Big Four banks think interest rates will drop?
Commonwealth Bank expects the RBA to cut rates in December 2024. It thinks there will be five 0.25 per cent cuts by the end of 2025, taking the cash rate to 3.10 per cent.
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Westpac thinks there will be a cut in February 2025, with four 0.25 per cent cuts in total to bring the cash rate down to 3.35 per cent.
NAB thinks it will be in May 2025, although it says February is possible, with five 0.25 per cent cuts down to 3.10 per cent.
ANZ has forecast a February 2025 cut, with three cuts in total to bring the cash rate down to 3.60 per cent.
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The up-and-coming fintech scored a pair of fourth-quarter beats.
Diversified fintech Chime Financial(CHYM +12.88%) was playing a satisfying tune to investors on Thursday. The company’s stock flew almost 14% higher that trading session, thanks mostly to a fourth quarter that featured notably higher-than-expected revenue guidance.
Sweet music
Chime published its fourth-quarter and full-year 2025 results just after market close on Wednesday. For the former period, the company’s revenue was $596 million, bettering the same quarter of 2024 by 25%. The company’s strongest revenue stream, payments, rose 17% to $396 million. Its take from platform-related activity rose more precipitously, advancing 47% to $200 million.
Image source: Getty Images.
Meanwhile, Chime’s net loss under generally accepted accounting principles (GAAP) more than doubled. It was $45 million, or $0.12 per share, compared with a fourth-quarter 2024 deficit of $19.6 million.
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On average, analysts tracking the stock were modeling revenue below $578 million and a deeper bottom-line loss of $0.20 per share.
In its earnings release, Chime pointed to the take-up of its Chime Card as a particular catalyst for growth. Regarding the product, the company said, “Among new member cohorts, over half are adopting Chime Card, and those members are putting over 70% of their Chime spend on the product, which earns materially higher take rates compared to debit.”
Today’s Change
(12.88%) $2.72
Current Price
$23.83
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Key Data Points
Market Cap
$7.9B
Day’s Range
$22.30 – $24.63
52wk Range
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$16.17 – $44.94
Volume
562K
Avg Vol
3.3M
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Gross Margin
86.34%
Double-digit growth expected
Chime management proffered revenue and non-GAAP (adjusted) earnings before interest, taxes, depreciation, and amortization (EBITDA) guidance for full-year 2026. The company expects to post a top line of $627 million to $637 million, which would represent at least 21% growth over the 2024 result. Adjusted EBITDA should be $380 million to $400 million. No net income forecasts were provided in the earnings release.
It isn’t easy to find a niche in the financial industry, which is crowded with companies offering every imaginable type of service to clients. Yet Chime seems to be achieving that, as the Chime Card is clearly a hit among the company’s target demographic of clientele underserved by mainstream banks. This growth stock is definitely worth considering as a buy.
ROCHESTER, N.Y. — Student athletes are now earning real money thanks to name, image, likeness deals — but with that opportunity comes the need for financial preparation.
Noah Collins Howard and Dayshawn Preston are two high school juniors with Division I offers on the table. Both are chasing their dreams on the field, and both are navigating something brand new off of it — their finances.
“When it comes to NIL, some people just want the money, and they just spend it immediately. Well, you’ve got to know how to take care of your money. And again, you need to know how to grow it because you don’t want to just spend it,” said Collins Howard.
What You Need To Know
High school athletes with Division I prospects are learning to manage NIL money before they even reach college
Glory2Glory Sports Agency and Advantage Federal Credit Union have partnered to give young athletes access to financial literacy tools and credit-building resources
Financial experts warn that starting money habits early is key to long-term stability for student athletes entering the NIL era
Preston said the experience has already been eye-opening.
“It’s very important. Especially my first time having my own card and bank account — so that’s super exciting,” Preston said.
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For many young athletes, the money comes before the knowledge. That’s where Glory2Glory Sports Agency in Rochester comes in — helping athletes prepare for life outside of sports.
“College sports is now pro sports. These kids are going from one extreme to the other financially, and it’s important for them to have the tools necessary to navigate that massive shift,” said Antoine Hyman, CEO of Glory2Glory Sports Agency.
Through their Students for Change program, athletes get access to student checking accounts, financial literacy courses and credit-building tools — all through a partnership with Advantage Federal Credit Union.
“It’s never too early to start. We have youth accounts, student checking accounts — they were all designed specifically for students and the youth,” said Diane Miller, VP of marketing and PR at Advantage Federal Credit Union.
The goal goes beyond what’s in their pocket today. It’s about building habits that will protect them for life.
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“If you don’t start young, you’re always catching up. The younger you start them, the better off they’re going to be on that financial path,” added Nihada Donohew, executive vice president of Advantage Federal Credit Union.
For these athletes, having the right support system makes all the difference.
“It’s really great to have a support system around you. Help you get local deals with the local shops,” Preston added.
Collins-Howard said the program has given him a broader perspective beyond just the game.
“It gives me a better understanding of how to take care of myself and prepare myself for the future of giving back to the community,” Collins-Howard said.
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“These high school kids need someone to legitimately advocate their skills, their character and help them pick the right space. Everything has changed now,” Hyman added.
NIL opened the door. Programs like this one make sure these athletes walk through it — with a plan.
With the introduction of the Employee Ownership Development Act , Illinois is poised to create the largest dedicated public investment vehicle for employee ownership in the country.
State Rep. Will Guzzardi’s bill, HB4955, would authorize the Illinois Treasury to deploy a portion of the state’s non-pension investment portfolio into employee ownership-focused investment funds.
That would represent a substantial investment of institutional capital in building wealth for Illinois workers and seed a capital market for employee ownership in the process. And because the fund is carved out of the state investment pool, it doesn’t require a single dollar of appropriations from the legislature.
Silver tsunami
The timing of the Employee Ownership Development Fund could not be more urgent. More than half of Illinois business owners are over 55 years old and are set to retire in the coming decade. When these owners sell their firms, financial buyers and competitors are often the default exit – if owners don’t simply close the business for lack of a buyer.
Each of these traditional paths risks consolidation, job loss and offshoring of investment and production. These are major disruptions to the communities that have long sustained these businesses. Without a concerted strategy, business succession is an economic development risk hiding in plain sight, and one that threatens local employment, supply chain resilience, and the tax base of communities across the country.
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Employee ownership offers another path. Decades of empirical research show that employee-owned firms grow faster, weather economic downturns better (with fewer layoffs and lower rates of closure), and provide better pay and retirement benefits.
The average employee owner with an employee stock ownership plan, or ESOP, has nearly 2.5 times the retirement wealth of non-ESOP participants. That comes at no cost to the employee and is generally in addition to a diversified 401(k) retirement account.
Because businesses are selling to local employees, employee ownership transitions keep businesses rooted in their communities. This approach can support a place-based retention strategy for state economic policymakers.
Capital gap
Despite the remarkable benefits of employee ownership and bipartisan support from policymakers, a lack of private capital has impeded the growth of employee ownership: In the past decade, new ESOP formation has averaged just 269 firms per year.
Most ESOP transactions ask the seller to be the bank, relying heavily on sellers to finance a significant portion of the sale themselves, often waiting five to 10 years to fully realize their proceeds. Compared to financial and strategic buyers who offer sellers their liquidity upfront, employee ownership sales are structurally uncompetitive in the M&A market.
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A small but growing ecosystem of specialized fund managers has begun to fill this gap. They deploy subordinated debt and equity-like capital to provide sellers the liquidity they need, while supporting newly employee-owned businesses with expertise and growth capital (see for example, “Apis & Heritage helps thousands of B and B Maintenance workers become owners”).
This approach is a recipe for scale, but the market remains nascent and undercapitalized relative to the generational pipeline of businesses approaching succession. To mature, the market needs anchor institutional investors willing to commit capital at scale.
State treasurers and other public investment officers could be those institutional investors. Collectively managing trillions of dollars in state assets, they have the portfolio scale, time horizons and fiduciary obligation to earn market returns while advancing state economic development.
Illinois’ blueprint
Just as federal credit programs helped catalyze the home mortgage and venture capital industries in the 20th century, state treasurers and comptrollers now have the opportunity to help build the employee ownership capital market in the 21st.
Illinois shows us how. The state’s Employee Ownership Development Act is modeled on proven investment strategies previously authorized by the legislature and pioneered by State Treasurer Michael Frerichs. The Illinois Growth and Innovation Fund and the FIRST Fund each ring-fence 5% of the state investment portfolio for investments in private markets and infrastructure, respectively, deployed through professional fund managers. Both have generated competitive returns while catalyzing billions of dollars in private co-investment in Illinois.
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The Employee Ownership Development Fund would apply that same architecture to employee ownership. The Treasurer would invest indirectly by capitalizing private investment funds deploying a range of credit and equity. The funds, in turn, would invest a multiple of the state’s commitment in employee ownership transactions.
The employee ownership field has matured to a point that is ready for institutional capital. The evidence base is robust. The fund management ecosystem is growing. And the business succession pipeline is larger than it will be for generations.
Yet the field still lacks the publicly enabled financing interventions that have historically built new markets in this country. State treasurers, city comptrollers and other public investment officers have the tools and resources at their disposal to provide that catalytic, market-rate investment to enable the employee ownership market to scale.
Julien Rosenbloom is a senior associate at the Lafayette Square Institute.
Guest posts on ImpactAlpha represent the opinions of their authors and do not necessarily reflect the views of ImpactAlpha.
