The Future of Rates, from an Economist. Where Will Rates Settle?

Everyone’s asking: where will the neutral cash rate land? In this clip, David explains why he sees the RBA’s neutral rate settling in the low 3s (around 3.1–3.35%) by 2026, why the first cuts may come as soon as Melbourne Cup Day, and why this easing cycle matters for households under cost-of-living pressure. But he doesn’t stop there—we look ahead to 2027–2028, when a fresh tightening cycle may emerge. Why? Factors like the AI-driven productivity boom, a fragile global order post-globalisation, ageing demographics, the net zero transition, and climate-linked inflationary shocks could all reshape what “neutral” means in the future. You’ll also hear why productivity reform is key to keeping inflation tame, and how policy settings, bureaucracy, and technology adoption will all shape Australia’s long-term rate environment. Clear, timely insights for anyone trying to make sense of where rates go next—and why neutral isn’t permanent. *Timestamps:* 00:00 – The crystal ball question: Where’s neutral 00:22 – Forecast: Cuts toward ~3.35%, then base in 2026. 01:12 – Looking beyond 2027: Next tightening cycle looms. 01:50 – Productivity = inflation’s enemy. Why reform matters. 02:32 – Why neutral could rise later 04:12 – Transition challenges and inflationary risks. P.S. This is just a snippet from our 559 | What Do US & China’s Tariffs Mean for Aussie Property Investors? For the full scoop, check it out here 👉 https://thepropertycouch.com.au/ep559-us-china-tariffs-property-investors/ P.P.S. And feel free to send in your questions here 👉 https://thepropertycouch.com.au/topics/ We would love to answer them on the show! #InterestRates #RBACashRate #NeutralRate #Economy #Productivity #AI #Investing #PropertyInvesting #AustraliaEconomy #financebooks neutral cash rate explained, RBA interest rate forecast 2025, Melbourne Cup Day rate cut, AI productivity economy, net zero inflation, ageing demographics rates, why neutral rate changes, interest rate tightening cycle 2027, property and interest rates, Australian economy outlook