1st November 2024
Global Cash Rates & Inflation
● The Reserve Bank of Australia (RBA) Cash Rate now sits at 4.35%pa and the annual inflation rate in the year to the September quarter is 2.8%.
● The US cash rate (policy rate) is currently between 4.75%-5.0%pa and the annual inflation rate in the year to September is 2.4%.
● The Bank of England Bank Rate currently sits at 5.0%pa to fight an inflation rate of 2.2%in the year to August.
● The European Central Bank Cash Rate (deposit facility) is 3.5%pa, to fight an annual inflation rate of 1.8% in the year to September.
ABE Launches Latest Product Offering
ABE is excited to announce the launch of our latest credit linked security for Goodyear Tire and Rubber Company.
This investment opportunity offers an attractive return between 7.40% – 7.60%* per annum return paid quarterly over a 5-year term. *(Exact return to be confirmed based on the market at time of issue).
Aussie Inflation Falls
Australian inflation slowed to 2.8% annually in the September quarter, marking its lowest rate in over three years and reinforcing the trend of easing price pressures within the economy.
While it’s unlikely that we see any rate cuts this side of Christmas, the Reserve Bank of Australia is expected to kick start monetary easing as soon as February or March next year.
As we have mentioned previously, term deposit investors may face further declines in returns as banks move proactively to stay ahead of any cuts to the official cash rate. Therefore, now could be an opportune time to lock in higher returns before they drop.
Retail Sales Cool
Retail sales in Australia saw a modest rise of just 0.1%, falling short of the anticipated 0.3% growth.
This underperformance suggests continued cautious consumer spending, potentially influenced by rising living costs and economic uncertainty.
The weaker-than-expected growth may also reflect a shift in spending habits as households respond to tightened budgets and interest rate pressures.
U.S Growth Expands
The resilience of the U.S. economy has been highlighted once more, with a robust expansion of 2.8%. This growth is particularly noteworthy as it occurs alongside a continuing decline in the rate of inflation.
Consumer spending, the predominant driver of U.S. economic activity, rose by 3.7%, the most significant increase since early 2023. This uptick was largely fuelled by substantial gains across a diverse range of goods, such as automobiles, home furnishings, and leisure products.
The Australian Bond Exchange offers various fixed-income securities that provide exposure to U.S. names within many of these sectors. For more information, speak to an adviser today.
European GDP up by 0.4% – flash estimates
Eurozone GDP grew marginally in the third quarter of 2024 by 0.4%, its fastest pace in two years, boosted by stronger-than-expected growth in Germany (0.2%) and France (0.4%).
While the result is still weak overall, it beat expectations and may give the European Central Bank more time to consider whether further cuts are needed.
The European Central Bank has already cut its official interest rate from a peak of 4.0% to 3.25%, and will likely be watching growth and inflation developments closely.
For example, Germany’s latest inflation figure was higher than expected, reiterating that inflationary risks could still remerge if central banks stimulate too quickly.
ABE Monthly Webinar
Watch the latest ABE Monthly Webinar, where we unpack key economic insights and trends influencing financial markets.
We also featured special guest Wayne Strandquist from Australian Independent Retirees (AIR), who shared valuable perspectives on the challenges facing retirees in Australia and highlighted some of AIR’s impactful initiatives.
Week Ahead
- U.S. Federal Election
- RBA interest rate decision
- Federal Reserve interest rate decision
- BoE interest rate decision
*Data accurate as at 01.11.2024
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