Its been huge week this week, and not just for those that overindulged at Melbourne Cup,
Its been huge week this week, and not just for those that overindulged at Melbourne Cup, as we saw both another RBA decision here in Aus and of course saw the excitement (for better or worse) of the US Federal Election.
The RBA kept things simple with continuation of the same holding pattern off the back of reducing but still high demand, with a rate cut looking more likely a mid-2025 arrival than a Christmas gift. Far more likely in the short-term however, is continued uncertainty around the winner of the US election, as regardless of the result (which by the publication of this article, should have at least been declared) the opposing party is almost guaranteed to challenge in a repeat of 2020’s results.
The American election has been predicated around a lot of the same issues that come up domestically here, with the cost of housing, living(!) and immigration pretty common complaints here too. We do remain the lucky country by comparison though. In our neck of the woods, the discussion around immigration is limited to policy dictating an appropriate number of legitimate places made available for new residents, with walls a little redundant in our neck of the woods (and not terribly practical on sandy beaches). The cost of living may be high, but minimum wages here far outstrip the US equivalent (albeit with far higher fuel costs) and housing inequality might not be ideal, but there is a long distance between investors with 2 or 3 investment properties here versus institutional investors (owning a minimum of 100 detached homes) accounting for half a million aggregate homes across the US. Wow!
We can also be grateful for the fact that we don’t seem to have quite the same level of personality clashes between our national candidates, with insults (this week at least) more likely to be about who’s flying Business Class versus Private Jet, and not who’s been charged with what.
It might seem odd to have lumped a foreign election and interest rate decisions together, but really what happens in the US is almost guaranteed to have an impact on fiscal policy here. The US Federal Reserve Bank has already reduced interest rates there, and depending on who comes out on top, we could see more of the same to come. That puts pressure on our own RBA and could mean the difference between faster interest rate relief, or more pain to come for household budgets.