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.

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.

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.

Story continues

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.

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.

“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.”

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.

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.

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.

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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TOKYO – New ruling Liberal Democratic Party leader Shigeru Ishiba, set to soon become Japan’s next prime minister, is considering naming former Chief Cabinet Secretary and health minister Katsunobu Kato as finance minister, sources close to the matter said Saturday.

Former Defense Minister Ishiba, the winner of the LDP’s presidential race on Friday, also plans to appoint former Environment Minister Shinjiro Koizumi as its election campaign chief, the sources said, as lawmakers brace for the possibility of a general election by the end of this year.

Ishiba, meanwhile, has decided to retain Yoshimasa Hayashi, known as a right-hand man to outgoing Prime Minister Fumio Kishida, as chief Cabinet secretary and the top government spokesperson. Hayashi previously served as foreign minister.

Kato, a former Finance Ministry bureaucrat, Hayashi and Koizumi were among the record nine candidates in the leadership race to choose the successor to Kishida, who did not seek reelection following a slush fund scandal that has hit the party.

Ishiba plans to launch the new LDP leadership on Monday. He is expected to become prime minister on Tuesday, as both houses of parliament are controlled by the LDP and its coalition partner, the Komeito party. He will then form a Cabinet on Tuesday.

The new president has decided to appoint Hiroshi Moriyama, the head of the LDP’s decision-making general council, as its secretary general, the party’s No. 2 position, while tapping former Defense Minister Itsunori Onodera as its policy chief, the sources said.

In his fifth presidential bid, Ishiba, who also served as the party’s secretary general, won 215 of the 409 valid votes cast by LDP lawmakers and rank-and-file members in a runoff vote on Friday, while economic security minister Sanae Takaichi secured 194.

Regarding the Cabinet lineup, senior vice finance minister Ryosei Akazawa, a close aide to Ishiba, is set to be given a ministerial post and transport minister Tetsuo Saito, a lawmaker of Komeito, is certain to be retained, the sources said.

Ishiba said at a press conference after he was elected LDP chief, “I will ask each of them (the other leadership candidates) to take the position that suits them best.” But Takaichi, who was narrowly defeated by 21 votes in the runoff, said, “I will support” Ishiba “as a member of parliament.”

Amid mounting speculation that Ishiba may dissolve the House of Representatives for a snap election in the near future, he apparently accelerated preparations on Saturday by having photos taken for campaign posters.

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FOCUS:New Japan ruling LDP chief Ishiba may face make-or-break moment as PM

By Patricia A. Scheyer
NKyTribune reporter

Linda Chapman is about to close a chapter on her life as Finance Director in the city of Florence, a position she has held for the last 21 years.

She finished her last week, and though she is a little sad about leaving, a part of her is looking forward to the freedom that comes with not having to report to work at a certain time of the morning.

“This is the first time in years that I haven’t had to plan anything,” she said, looking over her desk full of papers, and computers with three screens. “From January to August things are really busy with taxes and the budget, then we have the property taxes in October, so I always took my vacation in November or December. I felt like this was the best time to retire, too.”

Chapman is from the west side of Cincinnati and she said the roots are strong there — “you never leave the west side.”

She attended McCauley high school and the University of Cincinnati and then became an accountant.

“I didn’t know what I wanted to do until my senior year in high school,” she said. “I always thought I would go into a dental or nursing field and I took classes that would help with those fields, but there were things I didn’t like about those fields. So I decided to go with numbers.”

She eventually found her way to Rankin and Rankin, where she worked for ten years, doing audits for different cities in the Northern Kentucky area.

It was while she was doing the June 30, 2002 audit for the city of Florence that she discovered a problem on the books.

“Things just didn’t add up,” she explained. “The numbers weren’t right.”

Ron Epling had been the Finance Director for ten years at Florence, and Chapman knew him, so she worked the numbers over and over before she turned the evidence over to her boss at Rankin and Rankin, and the police brought charges against Epling for embezzling $4.9 million from the city.

Linda Chapman was hired as Finance Director in March of 2003.

“The embezzlement meant I started with a big mess,” she said. “The city was able to recover everything. It was bad, but it was up to me to come up with programs to install so that it never happened again. I put several safeguards in, and had to change all the systems over. It took about two years. So even though it was a big mess, it was a challenge for me, and I really like challenges.”

She said that the embezzlement was definitely the worst thing she had to deal with, but the result was the greatest satisfaction of her job, because she met the challenge and she fixed it. Governmental accounting is a special niche, she commented. Chapman said the people who work with her are very great to work with, the five ladies who work up front and her right hand man, Jason Cobb.

Through the years, she said she has had ups and downs, but her attitude is equanimical— most things ‘are what they are’ and she handles them with ease. Her philosophy is ‘one day at a time’, and she said she would come into work each day with the expectation of something good happening, something different, to make her smile.

Without the job to come into, what does she want to do as the next step in her life?

“I have no clue,” Chapman said with a smile.

Her first idea is that she has yard work to do, as well as some gardening chores to take care of.

Gardening is one of her passions. Chapman has a large garden, the length of the side of her house, and garden boxes in the back of her house.

“I grow green beans, tomatoes, zucchini, peppers, cucumbers, and a lot more,” she said. “Gardening is my stress relief.”

She is not a person who travels a lot. She likes to take her annual vacation to Pigeon Forge, an area she loves, but she has no sites she wants to see, like Mount Rushmore, or Hawaii.

“I don’t want to spend that much time in the air,” she explained about visiting Hawaii. “And I don’t want to go on a cruise. I can just picture me on a boat that becomes Titanic number two.”

Chapman has plans to go to Opryland for their Christmas extravaganza. Another passion she enjoys is Christmas.

“I am a big Christmas person,” she said, pointing to pictures of her decorated yard. “My yard isn’t that big, but I squeeze it all in.”

The lights and inflatables cover every available inch of yard, and she said it is such a glorious site people stop in front of the house to take it all in. It does take awhile to put it all up and take it all down, but she doesn’t mind.

“Inside, I put up my tree at Halloween, and during the time while I hand out candy, I also decorate the tree,” she said, laughing. “I love my Christmas decorations!”

She also decorates her office, and her co-workers like to decorate, so that tradition will continue.

Chapman loves to do jigsaw puzzles, and she said her minimum puzzle is 1000 pieces. She showed pictures of her special setup for puzzles so she can concentrate on them and not lose any of the tiny pieces.

“I do a lot of puzzles, and one of the worst ones I have done was candy canes,” she pointed to a picture that showed a massive amount of striped candy canes. “Another one that was challenging was one with pictures of rolls of toilet paper. I finished it, though, even though it took about a month, and I had to get new lighting. I haven’t met a puzzle I haven’t finished yet.”

Chapman feels she has enough to keep her busy through the end of the year, but she understands that when January gets here, she might reach a point where she looks around and there is nothing to do.

“I will still take it one day at a time, but I will be looking for different challenges, different things to fulfill me,” she said. “I have no doubt I will find things. I would like to get a better exercise regimen, to add to my walking.”

Chapman said her mom and dad live in the same area, and she has two brothers and a sister who live relatively close, so she knows she will be getting together with family a lot.

She always thought she might like to have a dog, but she hasn’t had one since she was a child, largely because she didn’t feel that she had the time that a dog requires, but she is now thinking about pet ownership.

“I figure I will take a breather, and then keep on keeping on, stay busy and keep my mind fresh,” she ventured. “I think it’s kind of exciting to see what’s going to develop out there. If something comes up, I can take advantage of being spontaneous. I am looking forward to it.”