Investors are rapidly losing confidence that some major central banks will cut interest rates in 2024, while the local futures markets are becoming increasingly confident that the RBA will actually hike before Christmas. At MM, we believe the rate cuts will come, but investors may need to be patient as it wasn’t that long ago that central banks read the inflation picture incorrectly, which led to the aggressive rate hiking cycle through 2021/2 in an attempt to put the “inflation genie back in the lamp” a goal that hasn’t yet been fully achieved. The point is they don’t want to get it wrong again and cut too early only to have to hike soon after as strong economic activity reignites inflation.
