The Reserve Bank of Australia (RBA) is likely to pause interest rate rises next month to evaluate evolving economic conditions, according to VanEck senior portfolio manager Cameron McCormack. This assessment comes as inflation remains a concern, with the latest figures showing a 3.8 per cent increase, slightly above expectations and still outside the RBA’s target band of 2 to 3 per cent.
McCormack highlighted housing costs as a primary concern, noting an increase of over 5 per cent year-on-year. This rise is attributed to the conclusion of energy rebates, persistent rental price increases, and an acceleration in goods inflation. While acknowledging the possibility of a rate hike in May due to persistent inflation, McCormack suggests the RBA will likely maintain its current policy settings.
McCormack stated that the RBA’s preference for a measured approach and quarterly rate adjustments indicates a hold on rates. This would allow the board additional time to analyse incoming data. He believes that markets have largely priced in the risk of higher rates, reducing concerns about rate sensitivity.
VanEck is a global investment manager providing a range of investment products, including exchange-traded funds (ETFs). They offer investors access to a diverse set of asset classes and investment strategies. McCormack anticipates that a more cautious stance from the RBA should support market confidence, particularly for mid-cap companies, especially those in the mining sector benefiting from the global demand for critical minerals.
