FEAR & GREED | Business News The Week Ahead | 26 May 2025
May 25, 2025
Interest rates are in the spotlight after a recent cut by the Reserve Bank, affecting both bond and stock markets. Upcoming economic indicators, particularly the CPI report, could signal future rate adjustments. The conversation shifts to the importance of capital expenditure in boosting productivity and economic growth. Additionally, there's a focus on household spending trends as key factors influencing the economy. Optimism grows for a resurgence in private sector investment, hinting at potential recovery ahead.
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RBA Rate Cut Insights
- The Reserve Bank of Australia considered a 50 basis point interest rate cut but chose 25 instead, signaling potential future cuts.
- The markets reacted positively, and it won't take much weaker economic data for another cut to happen.
Inflation Trends from Monthly CPI
- Monthly CPI data gives early signals on inflation trends but is less comprehensive than quarterly data.
- Inflation appears to be stabilizing within the 2% to 3% target range, which is positive news.
Shift from Inflation to Growth Worries
- The Reserve Bank is shifting focus from inflation to concerns about slower economic growth.
- Household spending forecasts have been downgraded due to disappointing consumer income and inflation effects.