Powered by MOMENTUM MEDIA
subscribe to our newsletter

Financial executives unimpressed with rate cuts

Half of Australian financial executives anticipated a further drop in interest rates in 2020, while many remain “less impressed” with the results of previous cuts, a newly released study from Deloitte has found.

Deloitte’s biannual CFO Sentiment survey, conducted on senior finance executives between 9 December 2019 and 21 January 2020, found that roughly 50 per cent of Australian chief financial officers (CFOs) anticipated that the Reserve Bank of Australia would cut rates at some point throughout 2020.

The survey found that most of the rest of the cohort of senior finance executives (48 per cent) believed the rates would stay the same throughout 2020.

Additionally, Deloitte partner and CFO program leader Steve Gustafson stated that most CFOs seemed “less impressed” with the current impact of current record-low interest rates, “after previous rate cuts failed to deliver the hoped-for stimulus”.

According to the report: “The rate cuts last year hoped to stimulate consumer spending and reinvigorate stubbornly weak inflation but failed to do so. 

Advertisement
Advertisement

“Consumer confidence is at a four-year low and rate cuts have thus far confused consumers, rather than reassured them.”

Deloitte Access Economics partner David Rumbens said: “Australia’s economy has entered 2020 in the slow lane, and with not a lot of ammunition left from the RBA to support it. 

“But beyond that, the start of 2020 has delivered a range of additional challenges, where the business community will need to be at the forefront to help Australia navigate.”

CFO sentiment falls

Deloitte’s survey also found that optimism levels of Australian financial executives have fallen in the face of both domestic and global economic uncertainty, and CFOs are growing increasingly cautious about the future financial prospects of their businesses.

PROMOTED CONTENT


According to the research, 54 per cent of CFOs remain optimistic about the future, down from 68 per cent who said the same in mid-2019, while current net optimism came in at 46 per cent.

The drop was largely driven by a larger percentage of CFOs reporting a neutral outlook on their future business outcomes, with 40 per cent of survey respondents stating as such, while the percentage of CFOs who felt specifically pessimistic about their businesses future remained flat when compared to the previous six-month period, at 8 per cent.

“...The climb in neutrality may indicate that Australia’s CFOs are adopting a cautious approach as the complexity of recent global events unfolds and their full impact is yet to be completely realised,” Mr Gustafson said.

“Although it is pleasing to note that the numbers that are pessimistic remain low.”

Mr Gustafson stated that despite higher levels of economic uncertainty, it appears CFOs have grown more willing to take on risk, “bucking the usual inverse relationship” between risk appetite and uncertainty.

“This trend mirrors the net improvement in optimism that CFOs reported this period, despite rising levels of uncertainty, suggesting an increasing level of comfort by CFOs with today’s persistently uncertain times,” he said.

However, it is important to note that the survey was conducted prior to the crescendo of both the Australian bushfire crisis and the international coronavirus outbreak, which would both likely inflict downward pressure on sentiment levels, according to Deloitte.

[Related: Coronavirus could curb property price growth]

Financial executives unimpressed with rate cuts
mortgagebusiness

Hannah Dowling

Hannah Dowling is a journalist for mortgage business, the leading source of news, opinion and strategy for professionals working in the mortgage industry.

Prior to joining the team at Mortgage Business, Hannah worked as a content producer for a podcast catering to property investors. She also spent 6 years working in the real estate sector at a local agency. 

Hannah graduated from Macquarie University with a Bachelor of Media and Journalism. 

You can email Hannah at: This email address is being protected from spambots. You need JavaScript enabled to view it.

Latest News

The chairman of the financial services regulator has resigned from his position, effective immediately. ...

Refinancing settlements for the first nine months of the calendar year 2020 are up 27 per cent on last year’s volumes, having peaked in Ju...

The Tasmanian-based lender has seen a 43 per cent rise in settlements in the first quarter of the financial year, driven by strong demand fr...

FROM THE WEB

Join a group of highly informed brokers.

Broker Pulse, a community-driven knowledge base of lender performance Reveal exactly which lenders are making life easiest for brokers and their clients by taking this monthly survey and joining a group of highly informed brokers who leverage these insights every month.

JOIN NOW
podcast

LATEST PODCAST: Victoria’s surprising appetite for new homes

Do you expect to see strong uptake of the HomeBuilder scheme?

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.