Everyone thinks the RBA is about to cut interest rates. The media is telling you.
The banks are telling you. Even the government wants you to believe it. But
they're all wrong. And if you believe them, if
you borrow more, if you buy a property, if you think your mortgage is
about to get cheaper, you're about to get blindsided. Here's
what nobody's telling you. The RBA is actually trapped. Inflation
isn't dead, it's just hiding. And the data that's coming in over the last,
you know, few months, it's going to force them to do the one thing
that will shock every single Australian homeowner. They're
going to actually raise rates, not cut them. raise them. I
know that sounds insane, right? Because you're so used to low rates. I
know it goes against everything you're hearing, everything they're telling you, but
I'm going to show you exactly why it's about to happen. The data they're looking at,
the pressure they're under, and what you need to do right now to protect yourself
before it's too late. late. I'm Lloyd James Ross, seven figure investor and
entrepreneur and I've helped thousands of business owners and professionals turn
financial stress into success. If you're stuck in old money
habits, overwhelmed by investing or unsure where to start, this
is for you. I'll give you the mindset and strategies to take control,
grow your wealth and achieve financial freedom. It's time to
make your money work for you. At its most recent meeting, the RBA held
the cash rate at 3.6% and explicitly said
it did not consider cutting rates. That's not the language of
a bank about to loosen policy. So here are the
key facts. Rates were cut three times in 2025. which
they shouldn't have been, but they were. And then they stopped at 3.6%. The
RBA's inflation forecasts have been nudged higher into
mid-2026, which is this year. And the deputy governor, Andrew
Hauser, stressed that inflation is still too high, as we know. It's in the
threes, right? When a central bank stops cutting and puts inflation
first, markets start to price in rate hikes instead of all the
relief. So why the no-cut
story is probably now ending? Inflation
isn't gone. It's just cooling temporarily. And
the latest monthly CPI report showed that inflation did
ease somewhat. It went down from 3.8% to 3.4%, but it's still
above the RBA's 2% to 3% target. That's what
they're targeting. 2% is the best, meaning there's still some pressure there.
So core inflation still weighs heavily on the RBA's decisions. So
yes, inflation has slowed a little bit, but that's not yet in
the zone where cuts can make sense now at all. In fact, they
made that mistake last time when they should have left rates at
4.1 and they cut them right down to 3, but they should have just left them. And they restocked
inflation. So the notion that easy cuts are
coming across 2026 is fading. And everybody knows that
now. Hikes are starting to creep into the forecasts. They're assuming that
hikes are going to happen this year. So market economists are starting to flip
Yeah, the big four banks are now, they're all split. Some
are forecasting a 25% point hike as
soon as next month, February, right? Others are still seeing a
bit of a hold. But economists are warning that the RBA
may raise rates at least twice in
2026, right? Persistent underlying inflation will force them to do
that. So it's not random chatter.
It's not just speculation. It's becoming more of a consensus now
across the board. And what does this mean for your money? What
does this mean for your personal finances? So if you're a mortgage holder,
particularly if you've just recently grabbed the mortgage, arguably,
what could possibly be not a really good time? Record high houses.
mortgage rates fairly low still, and you're like, yeah, I've got
my house, and then bang, you're going to get hit with some rate hikes, right? Like, why is
my mortgage going up? I didn't understand what interest rates mean. This is what most people do.
They jump into the housing market because they get FOMO. They want to go through the
rite of passage in the Australian life of owning a home.
If you don't own a home, you're a peasant. And they want to make sure they're not peasants, so
they go and get a house. There's other reasons why they buy houses, too. I get it. But a
0.25% rate hike will
add to the repayments obviously. And people won't realize that until it happens, especially
again if you're a high debt household, meaning you've just acquired
a home and you're already challenged to meet the repayments. So
that's for homeowners, that's for people who own a mortgage. What about for
consumers? Well, it's good for us. The
consumer Confidence will dip if rates go
higher, which reduces spending. Now, the whole idea of
that is that so inflation falls. Now, if you're a consumer, it means
you can start buying maxi bonds without having to mortgage your house and get one. It
means you can buy maxi bonds for less than $6.60. It just means that
maxi bonds aren't gonna go up. And I know that's the most important thing as a consumer. When
you go into the corner shop and you go to get your maxi bond, you don't really wanna
be paying 10 bucks for it. Now, if we don't get in front of this and hike
rates, you're gonna be paying 20 bucks for a maxi bond. And
I know you don't want that. I don't want that. So as
a consumer, we want rates to go higher. The unfortunate thing is most
consumers are mortgage holders too, or a lot of them are. And
so you're like at this impasse, like I want rates to go up because I want to have my maxi bond,
but for not paying too high a price for it, but I also want to
make sure I don't get hit with my mortgage. It's a hard
place to be. What about as an investor? Well, interestingly,
when rates go up to curve inflation, assets
fall. So this is very much an inverse correlation with interest rates. And
people don't understand this too, but it's a very important macroeconomic principle.
It's physics. It's mathematics. It's not up for debate. When
rates go up, asset prices fall. I've done a number of
episodes. Go back and check out all our episodes. I've done a few episodes
on the specifics of this. So if rates start to go up,
property prices will come off the ball a bit. I think too,
based on what happened in Bondi recently, if a new government
is formed with One Nation, and I'm pretty certain they
have a good chance to win. They're starting to edge in
front of the liberal coalition. If
they win, if another party, no
matter who it is, comes in, they're going to drop immigration down below 100,000. Now
if that happens, less people, less demand for housing. So that's
going to cool prices. The other thing is inflation will, if
they need to get hold of inflation, they'll increase interest rates, which I'm talking about right now. That
will curb property prices because people won't be able to borrow as much to buy. Plus
they won't want to have more mortgage repayments. So demand for property
fueled by debt will fall and prices will fall or
they'll stabilize as a result. Now, as rates go
up too, there'll be more support for the Australian dollar. Now, you don't have to be a genius to
see in the last few months, the Australian dollar has gone from 61 US cents
to 67 US cents. So there's been like a 10% increase
in the value against the USD and other currencies of the Australian
dollar. And the reason why that's happening is because interest rates are going to go up. So in
a country, whenever you increase interest rates, you increase the returns people
get on the bonds when they put money in the country. So it's increasing the demand for
our Australian bonds. And that means that effectively, Australian
dollars gonna increase in improving value against the other currency
So if you're someone who likes to travel to America, you're gonna get more American dollars for
your Australian dollars Okay, the other thing that's gonna happen is capital is gonna shift into
you're bearing assets again like bonds and turn deposits So people are gonna start
putting money in different places, which means they'll pair it a little bit out of the stock market,
too so you're gonna see price stabilizational falls
Maybe fall, but I think stabilization in property because the demand is still there.
You're going to see falls maybe or stabilization in the stock market. You're
going to see other assets fall. You're going to see bonds rise
in demand. So you're going to be rising in prices and bonds and turn deposits will
become more popular. That's what will happen in terms of the investment landscape.
Just quickly, if you're ready to take control of your finances but feel stuck on
where to start, I have a solution. My book, Money Buys Happiness,
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you achieve financial peace. Get your copy via the
link in the show notes and let's get your money working for you. Now back
to the episode. So this isn't just about rates
changing, it's about changes of how money's flowing
through the entire economy, yeah? Now, why the
RBA might actually pull the trigger on this and
increase rates. If inflation stays above the target, which it
looks like it's going to, and household spending remains solid, which by
the way, you just go to the corner shop and you see if household spending is high. My
wife recently went to a concert and people were paying $300 for a VIP ticket that wasn't
even VIP to drink beer out of plastic cups. I think it's pretty
solid. I don't think that's going to wane. Even
with a 0.25% increase, there seems to be no
end to people spending money. It's just crazy. I
think that's going to remain solid. That's going to increase the likelihood of a
rate increase. Household spending growth is
really what's still buoyant. It's going to really probably
force their hand. We've got to look at
the labor market, the jobs market, right? It's not collapsing. Unemployment's
actually edging... A little bit higher, but not
really sharply, which is interesting. In fact, recently it just came down. So,
if unemployment was going up, the RBA is like, oh my God,
we can't do this and increase rates because we're going to exacerbate the
unemployment. But the reality is it's not. So, there's all
these factors like the spending is still high, the
jobs are still there, so there's not unemployment increases. Inflation is
still sticking high and assets are at all-time highs. Like, the reality is
that the RBA is completely justified for increasing the
interest rate. It makes so much sense, right? So the RBA's job
is not just to guarantee the cheap money, of course, it's to actually manage... The idea
is to... Manage two things, unemployment and inflation. That's
pretty much what it's there for, okay? To avoid big crashes. So
here's the big mistake that most Aussies are gonna make. Most people are betting
on rate cuts. And of course they want them to cut because they all want debt
and property. They want property to keep going up. So like, hey, cut rates. They all do
little dances on TikTok when they cut rates. So whether you've got a mortgage
or you've got investment decisions, people are wanting lower rates because
it's cheap money and that fuels asset prices. and
who doesn't want to get richer, right? But they're not pricing in cuts and
inflation is still above the target. So consumer sentiment really and household
debt really remains somewhat fragile at this point because it is inflated
and we will see rates go up at some point. So by
the time that happens in the market or people admit it, the
moves are typically priced in. So, if
you want to stay ahead of the Australian economic turning points, stay
close to this channel. Because I do these like every month, we're doing
more of these and I'm really our fingers on the pulse when it comes to
the economy. In fact, If you go back and listen to my last few episodes
on this before all this stuff happened, we've been very accurate with
our anticipation of what the RBA will do. Go back. I challenge you. Go back and look
at the episodes, listen to what happened, and then go track what happened. It's
fairly obvious to see what needs to happen because a lot of people don't
look at the primary data. They don't look at Maxibon prices when
they're in the BPI, but I think when I see them, I'm like, why did I just pay $6.60 for
that Maxibon? That's interesting. Why is my McDonald's meal
$30? Why? They're not understanding that that's that it's
huge inflation. And it's not even like small, it's more than 3%. So you don't
have to be a rocket scientist to work it out. But then because I'm
not a mortgage holder, I'm completely objective. I'm
a property bear. At this point in time in the cycle. I
just don't think there's many of me around. I think when you tune into our channel,
you're going to get a very objective opinion without me being
influenced too much by owning housing. I don't even own
a house. I don't even own any property. If you want an unbiased objective
opinion with some data that backs it up, some
real current data about what's happening in the Australian economy and
how that affects you, subscribe to this channel because I'm not here to BS you,
right? I got no reason to. So yeah,
hit the subscribe button, share this with a friend. See you in the next episode. Leave us a comment below and I'll
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