Trying to agree

?A bit of a different newsletter today.

Some of you know I've been in hospital for the last few weeks, hopefully out in the next week or two.

The problem with this note is I only have one functional arm, so I cannot type and have resorted to voice-to-text dictation.

There is not a chart in sight. This is distressing to me!

I wanted to get something out because this week, coming up, we've got a key RBA decision on interest rates.

This, of course, will directly impact your mortgage rate.

The market is giving a 90% probability of rates decreasing this week by 0.25%.

I hope they are right.

I don’t think it’s the certainty that 90% implies.

Perhaps, after a while, once a few “economic influencers” have an opinion, there is a pile-on, and the favoured view becomes the hot favourite.

Don’t get me wrong, I know many of us are under a lot of financial stress. Believe me, I also know the impact this has, not only financially, but the knock-on on all aspects of our lives.

This is another valid reason many are screaming for interest rate relief.

However, for better or for worse, we know the RBA works off facts, not anecdotes, and (hopefully) not what our vote-seeking politicians want.

The overall economic numbers indicate a healthy economy with even some inflation risks – certainly not an economy that requires significant rate cuts:

1. The unemployment rate is only 4%, at historically low levels,??and not rising, despite rapid population growth

2. Although trending down, the official inflation rate is still above the official RBA target band of 2-3%

3. CBA, by far the largest retail bank in Australia, released record profit results this week. Importantly, there was no rise in very low mortgage defaults, showing that there are very few mortgagees in actual distress

4. JB Hi-Fi, which I call the “ultimate discretionary spend indicator”, produced record sales over the past six months, if we were truly under cost of living pressure, surely it would show up here?

5. US inflation surprisingly ticked up this week??- not one we would generally over-stress about, but of course, we are facing a new president, not known for his predictability or frugalness.

You just look at these facts, and you don't see an economy desperate for an interest rate reduction to stimulate it.

This is why I am not as confident of a rate cut as most others.

Certainly, I couldn’t be relying on interest rates being over 1% lower in the second half of the year, as most forecast.

I would change my mind if these key indicators above were to change, but I’ve been around enough not to be induced by the rah-rah hopeful gang, espousing their wishes as facts.

There is plenty for the RBA to ponder before announcing its interest rate decision on Tuesday afternoon.

Stay tuned!

Like to talk? Here is the link if you would like to book a time with the team for anything property and finance:? ?https://fin4nurses.me/client-meet

Have a Great Week!!