00:00Well, we are expecting an easing. Most people think it will come back to the target rate
00:08sometime in the first half of the year, if not certainly by the end of the year. So there
00:14is this expectation of interest rates easing coming on board in 2025.
00:19So tell us a bit more about the interest rate cuts that could be ahead. What are your predictions
00:24for this year?
00:26Well, I would think that February meeting, they meet in February and then again in April
00:33and then again in May. And I think February might be a bit too soon. I think they'll want
00:38to see what the end of the year numbers look like. We'll see quarterly GDP for the end
00:43of the year come out in January. So they'll have those numbers. So unless something really
00:47big happens, I think February might be a bit too soon. So I would look more like April
00:52or May to be most likely seeing the first rate cut.
00:58And what's your take on the talk that the RBA has been sitting on its hands for too
01:02long because comparisons have been made to overseas where rates have been cut. How relevant
01:07is that to our economy?
01:08Well, a lot of the inflationary pressures that we've seen lately have been domestic
01:15based. They've been from services and other domestic issues. So the RBA really has to
01:22keep an eye on what's happening at home. They can certainly look to see as a potential
01:28path of other countries, but it's more important to to focus on what's happening here, because
01:33the last thing they want to do is to start cutting too soon. Because if we get into a
01:38whole nother inflationary spiral, we're right back to square one. So they want to be careful
01:44and be sure that when they do start to cut rates, that we well and truly have inflation
01:48under control.
01:50Now, of course, all of this is intertwined. But where are house prices expected to go
01:54this year and also rent prices?
01:56Right. Well, we have seen already at the end of the year a bit of an easing in housing
02:02prices. We see houses being on the market a bit longer, more houses being passed over.
02:09So we do expect there to be an easing in the housing market. Now, that doesn't mean we're
02:15going to see prices coming down necessarily, but we will see we should see a slowdown in
02:22that growth of prices. And that should come along with rental prices as well. And when
02:29we see there's like a chain reaction here for rental prices, when we see construction
02:36constructions coming online doing it's struggling, but houses are starting to be
02:41completed. We see more of this backlog being eaten into, which means people will get out
02:47of rental properties, get into the homes that they were renovating or building. That will
02:51also help ease up the rental market, we hope.
02:54It was a good year for share markets in 2024. What was behind that for us and any
02:59predictions for this year?
03:01Yeah, well, I mean, overall, the economy in Australia, the cost of living has been has
03:06been difficult. But the economy is really not doing all that badly in terms of growth
03:12potential, oversee markets potential, and company performance. We've seen lots of
03:18profitability and good opportunities for investors. So that, of course, pushes the share
03:24market and helps keep things going. In 2025, growth projections for Australia are
03:30supposed to improve. We were about, you know, a little bit over 1% this year. Next year,
03:34it's supposed to go up to as much as 2%. So we do expect significant improvements in
03:40growth. And as inflation eases, cost of living should, should help even out. And that
03:46will be even better news for companies performance.
03:50What would you say the bigger challenges ahead for the Australian economy this year, but
03:54also any bright spots?
03:56Right, okay. Well, I do think housing will continue to be a challenge. There's a housing
04:01shortage, that's not going to go away in a year. So we'll continue to see that to be a
04:07challenge. I think that cultural exports, agricultural production is expected to be
04:15slightly down this year. Of course, last year was a record year. But But this year, we
04:19expect there to be a bit of a decline in output, which, which will hurt Australian
04:25exports. The minerals markets are a bit mixed right now. So we'll have to see what
04:30happens with those going forward. But overall, as I said, overall growth is supposed to be
04:35good, we should have inflation under control, the cost of living should should actually
04:40start to even out and we hopefully will find and so we expect there to be maybe some some
04:48performance records and maybe some increase in in wages, which should help the economy
04:53continue to grow and get out of this current lacklustre performance.
04:58And so Dr. Stone, overall, how are Australians feeling about their financial health this year?
05:03And will that likely bear out?
05:06Um, I think the consumer sentiment has been has been fairly weak toward the end of the
05:11year. But I think people are starting to have looking forward to that rate cut that we're
05:16talking forward to getting out of 2024, which was always expected to be a tough year is
05:22always going to be a transition year. And so hopefully getting into a more positive, more
05:27growth projections going forward, getting getting mortgages once they get their rate
05:32cut, getting mortgage payments, and feeling better about their financial position. Once
05:38that debt, that interest rate on debt comes down and people have a bit more disposable
05:44income to be able to further pay down debt if they choose to.
05:49Dr. Susan Stone, Chair of Economics at the University of South Australia. Thanks so much
05:53for speaking with us.
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