At the start of 2024, markets confidently anticipated two rate cuts from the RBA before the NYE fireworks ushered in 2025. That didn’t materialise. Instead, market speculation over the RBA’s timing led to increased volatility in long-end rate markets, particularly in the latter half of the year.

December 2024 marked a definite change in the RBA’s language around the direction of interest rates going into 2025. All of this points to the next rate decision being down, not up, as supported by weak GDP figures (particularly the private economy) and wages growth data. While employment growth is robust, as noted, it is dominated by the public sector.

In our 2025 strategy paper, we dissect the key themes that impact our Interest Income strategies for the year ahead, including:

1. Economic backdrop – inflation, capacity, employment markets

2. RBA positioning – are those rate cuts actually coming?

3. Fixed rate v. floating rate allocation

Analysis of the above and an assessment of fixed income markets guides our Interest Income Strategy positioning for 2025.

To read our in-depth report, click on the following link: https://bit.ly/InterestIncomeStrategy