Rate cuts could come earlier than expected — but there's a catch

One of Australia's leading banks says rate cuts could come sooner than expected. Plus: petrol prices, a big ASX IPO and a Telstra outage.

Australians could see an interest rate cut earlier than expected — but that might come at a cost. Source: AAP / Mick Tsikas

Even if you weren’t a Telstra customer, you were likely affected by its network outage on Wednesday, as its share price fell in the aftermath.

However, sharemarkets were more impacted by the renewed hostilities in the Middle East which caused a spike in oil prices and will likely lead to higher petrol prices in a few weeks.

On a positive note, the Australian sharemarket welcomed its newest company in what was a successful listing.

And one of our biggest banks is now expecting interest rates to fall earlier than expected, albeit with a condition: they need to rise first.

Petrol prices rise, but less than feared

Australian drivers are beginning to feel the impact of the government's decision to reduce the temporary fuel excise discount.

The national average price of unleaded petrol rose by 3.2 cents a litre during last week to just under $1.63 a litre.

While prices increased, the rise was far smaller than the 16 cents a litre experts feared after the fuel excise discount was halved.

Lower global oil prices initially negated the impact, but the renewed conflict in the Middle East this week saw Brent crude rise again, approaching US$80 ($115) a barrel.

This increases the likelihood that fuel prices could jump in the coming weeks, despite higher fuel shipments in June this year compared with June 2025.

Rate cuts coming earlier, but more hikes first

Westpac now expects the first RBA rate cut to come in 2027 instead of 2028, bringing it into line with the other major banks.

However, chief economist Luci Ellis still believes the Reserve Bank will need to lift interest rates twice before then because inflation risks remain.

The former RBA assistant governor says inflation was high before the war, and while some businesses are passing on higher fuel costs, other factors are contributing to it like stronger prices for electronics because of AI demand.

For borrowers, it means mortgage rate uncertainty is unlikely to disappear any time soon.

Telstra’s network outage woes hit investors

While Telstra customers and businesses were disrupted by the network outage on Wednesday, its shareholders also took a hit.

Shares tumbled 3.3 per cent since the outage took place.

The company is one of Australia’s most widely held stocks, with many investors likely to have a direct stake following its first float in 1997, while others would have exposure through their super funds.

Australia's biggest IPO of the year attracts investors

Construction company FDC Consolidated became Australia's biggest IPO of the year after raising $400 million.

Its shares surged 17 per cent on debut on Thursday before closing more than 12 per cent above the offer price on day one and adding another 3 per cent on day two.

It’s suggesting investor appetite for new listings remains high following record demand for SpaceX, which was the first time Australian retail investors got access to a major US company in a Wall Street IPO.

The challenge however is to attract more companies to list on the Australian sharemarket, with only 17 added to the boards this year.

That’s this week’s On the Money wrap. Prefer to listen? The On the Money podcast breaks down the latest every weekday. You can tune in here or wherever you get your podcasts.

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