Market expectations have firmed around a February rate cut by the RBA says Carl Ang, Fixed Income Research Analyst, MFS Investment Management.
“This is largely driven by the most recent quarterly inflation print which is now finally inside the RBA’s target band on an underlying basis,” says Ang.
“Another key growth uncertainty for RBA policy deliberations is the US tariff outlook and its implications for Asia Pacific economies, especially the slowdown in China.
“As such, we think a February cut is the most probable outcome but remains far from a certainty, in our view.
“Tightening labour markets and fiscal expansion are a fundamentally different backdrop to the low interest rate environment pre-pandemic and could lead the RBA easing cycle to progress more slowly than anticipated. Our RBA baseline remains for cash rate cuts every quarter to 3.6% over 2025.”
Australia ETF Industry Record
Vanguard’s ETF Investment Product Manager, Andrew Jones commented on the record level now invested in ETF products.
“Australia’s ETFs industry recorded its best ever month in January, with total assets under management surging to a new record of just under $250 billion on strong cash flows of $4.6 billion and favourable equity markets.
Also read: Managed Bond Fund Inflows in Australia Continue to Swell
“With the universal adoption of ETFs and continued growth in the number of investors using ETFs, we see the ETF cash flows in 2025 continuing to be very strong, quite likely exceeding $30 billion for the industry, like we saw in 2024.
“Global equities remained the most popular asset class for investors, attracting $1.76 billion or 38% of the total net cash flows.
“However, Australian equities were back in favour, with investors channelling in $1.37 billion, which represented 30% of the total net cash flows.
“Australian fixed income ETFs also continued to attract good investor support, with $437 million of net cash flows over the month to 31 January.”
