How Will Fed's Rate Cut Impact Australia and New Zealand?

ASX_Stars
09-13

As New Zealand's inflation rate dropped to 3.3% in July, the Reserve Bank of New Zealand (RBNZ) announced its first interest rate cut in four years.

On August 15, the RBNZ unexpectedly lowered the Official Cash Rate (OCR) from 5.5% to 5.25%. This marks a significant shift from the RBNZ's previous guidance (as recent as May), which suggested that interest rates would not be cut until August 2025.

Rate cut cylce already begins in New Zealand! Expect 3+% in 2025?

Although inflation is now close to its target range of 1% to 3%, RBNZ emphasized that policy will need to remain restrictive for some time but still predicts that the cash rate will reach 3.85% by the end of 2025.

Following the RBNZ's reduction of the OCR, major banks in New Zealand quickly took action to lower mortgage rates, a move that benefits homeowners facing high interest rate pressures.

In the wake of New Zealand's rate cut, speculation has begun about when Australia might start cutting rates.

This week, Australia's four major banks announced reductions in term deposit rates.

$COMMONWEALTH BANK OF AUSTRAL(CBA.AU)$ led the way by cutting rates on nearly all its term deposit products by up to 50 basis points (0.5%). Shortly after, $NATIONAL AUSTRALIA BANK LTD(NAB.AU)$ and $ANZ GROUP HOLDINGS LTD(ANZ.AU)$ followed suit with similar measures.

These rate cuts could reduce interest earnings on a 100,000 AUD deposit by up to 730 AUD over 12 months.

Many believe that rate cuts in Australia are finally on the horizon! However, the Reserve Bank of Australia (RBA) remains hawkish.

Why have Australian commercial banks started to preemptively lower rates?

This move is primarily in anticipation of a potential rate cut by the RBA. The market expects the RBA to cut rates in December, though the expected reduction is only 25 basis points. Lowering deposit rates can effectively ease the profit pressure caused by intense competition.

This move reflects a broader trend, with experts suggesting that the RBA may be at the peak of its rate-hiking cycle.

A rate cut by the US Federal Reserve could accelerate the pace of rate cuts in Australia.

Besides the mentioned relief on mortgage pressures, a rate cut could also shift investor focus towards high-dividend companies. If deposit yields decrease following a rate cut, high-dividend stocks in Australia could become a better option.

Some banks, mining, and energy companies in the Australian stock market are known for their high dividends, which typically offer stable and substantial returns, attracting investors seeking regular income.

How do you view?

What stocks do you recommend?

Leave your comment and also post to win tiger coins~

How Will Fed's Rate Cut Affect Your Life?
Whether your are Singaporeans or Aussi or Kiwis, people with home loans could see their burden eased as banks will or already follow the Fed by significantly lowering mortgage rates. With the Fed shifting focus from rate hikes to cuts, it signals that inflation might be easing faster than expected. ----------- Do you think rate cut would bring positive impact to your life? Will your investing trend shift?
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

Comments

  • koolgal
    09-13
    koolgal

    🌟🌟🌟I like $WESTPAC BANKING CORPORATION(WBC.AU)$  as it is the 2nd largest bank in Australia and the oldest, established since 1817.  WESTPAC is part of the Big 4 Australia Banks and offers a comprehensive range of banking services.  It owns St George, Bank SA, Bank of Melbourne and RAMS brand.

    WESTPAC 's share price has been on a tear as it  has jumped 39% year todate and in 2023, WESTPAC has skyrocketed by 49%.

    I like WESTPAC' s nice and juicy dividends, which are paid twice yearly.  The current dividend yield is 4.58%.  WESTPAC has recently hit a 52 week high on September 10 at AUD 32.31.

    So not only does WESTPAC pay great dividends which are 100% franked, it has been rewarding investors with capital growth as well.  Now, that is the kind of stock I would like to invest in. 

    @ASX_Stars  @TigerStars  @Tiger_comments  



  • icycrystal
    09-13
    icycrystal
    Fed cutting rate will most probably affect market.

    better to keep to companies with good, stable fundamentals, this way can  sleep well / better at night no matter how the market swings...

    @Aqa @GoodLife99 @Universe宇宙 @rL @HelenJanet @Shyon @LMSunshine @koolgal @SPACE ROCKET @TigerGPT

    Some banks, mining, and energy companies in the Australian stock market are known for their high dividends, which typically offer stable and substantial returns, attracting investors seeking regular income.

    How do you view?

    What stocks do you recommend?

    Leave your comment and also post to win tiger coins~

    • icycrystalReplykoolgal
      [Like]
    • koolgal
      Thanks for sharing 😍😍😍
    • TigerGPT

      根据最新的 新闻和观点,当美联储开始降息时,股市通常会受到影响。对于那些希望在市场波动时能够保持良好和稳定基本面的公司,他们往往能提供稳定且可观的回报,吸引那些寻求定期收入的投资者。

      在澳大利亚股市中,有一些银行、矿业和能源公司以其高股息而闻名,通常提供稳定的和可观的回报。关于这个问题,我会给出一些建议,但请注意,以下建议仅供参考,不构成投资建议。在做出任何投资决策之前,请确保自行进行充分的研究和风险评估。

      以下是一些可能符合您要求的澳大利亚股市公司:

      Commonwealth Bank of Australia (CBA) - 澳大利亚联邦银行  

      Westpac Banking Corporation (WBC) - 西太平洋银行公司  

      BHP Group (BHP) - 必和必拓集团  

      Rio Tinto Limited (RIO) - 瑞铜有限公司  

      Woodside Petroleum Ltd (WPL) - 伍德赛德石油公司  

      Santos Limited (STO) - 山图石油公司  

      这些公司在澳大利亚股市具有较高的知名度,并且在过去一段时间表现出稳定的盈利能力和股息分配。然而,市场条件和公司业绩随时可能发生变化,因此请在做出投资决策之前进行充分的尽职调查和风险评估。

      我希望这些信息对您有所帮助。请记住,以上建议仅供参考,不构成投资建议。在进行任何投资之前,请咨询专业的投资顾问,并根据您自己的投资目标和风险承受能力做出决策。

      同时,根据规则要求,我提醒您:以上内容仅供参考,不构成投资建议。投资有风险,您需要自行承担投资风险。

  • Aqa
    09-14
    Aqa
    Before The U.S. Federal Reserve’s interest rate cut, the Reserve Bank of New Zealand (RBNZ) announced in August its first interest rate cut in four years. It is widely believed that the Reserve Bank of Australia will start to cut rates in December 2024. It is time to start looking to invest in high-dividend stocks. Thanks @ASX_Stars @icycrystal
    • koolgal
      Thanks for sharing 😍😍😍
  • koolgal
    09-13
    koolgal
    Calling all my Kiwi /Aussie Tiger Friends, come share your picks for your favourite Aussie stocks and win more Tiger Coins. @Barcode @nomadic_m @Tui Jude @Hen Solo @Kiwi Tigress 😍😍😍
    • koolgalReplyKiwi Tigress
      https://tigr.link/to?data=aHR0cHM6Ly90dG0uZmluYW5jaWFsL3Bvc3QvMzQ4ODY2ODAxNjg4NjU2P3V0bV9jYW1wYWlnbj0zNDg4NjY4MDE2ODg2NTYmdXRtX21lZGl1bT1jb3B5JnNoYXJlSUQ9OGUxMGEyZDFlODk4NDMyYTE0YzMyYzJkMzVhZWFiM2YmaW52aXRlPTdCUzE1TSZsYW5nPWVuX1VTJnBsYXRmb3JtPWFuZHJvaWQmdXRtX3NvdXJjZT1wb3N0
    • BarcodeReplyKiwi Tigress
      Cheers for the shout out KT! 🍀
    • koolgalReplyKiwi Tigress
      I sent you the link.
    • koolgalReplyKiwi Tigress
      That is strange.
    • koolgalReplyKiwi Tigress
      Must check it out
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