SWP Newsletter – January 2025
As 2024 drew to a close, the year finished much as it had begun, with a strong focus on inflation, stagnant interest rates and Australia’s housing market.
Returning inflation to target is the Reserve Bank’s highest priority. While there has been substantial progress as inflation continues to fall, figures are yet to reach the 2-3% target set by the RBA. The latest data shows a slight rise to 2.3% with underlying inflation sitting at 3.2%, down from 3.5%.
In December, the Board left the cash rate at 4.35% which hasn’t moved in 14 months. All eyes will be on the RBA announcement in February as there has been speculation of a rate cut; however, the Board remains cautious and will not give any indication as to when they will make the first rate cut in 2025. House prices continued to soften, with national home prices recording the first decline in almost two years in December.
Stock markets closed out a strong year on a weaker note with the Dow Jones ending December around 5% lower and the S&P/ASX 200 falling a little over 3% as the anticipated ‘Santa rally’ did not eventuate.
The Australian dollar ended the year in the doldrums at just under 62 US cents.
