Hoping for a rate cut before Christmas? Don't hold your breath

Pressure is mounting on the Reserve Bank of Australia board to reduce the cash rate when it meets next week following data released by the Australian Bureau of Statistics yesterday.

ABS figures showed inflation fell by one percent to 2.8 percent in the September quarter, down from 3.8 percent in June. This places it in the RBA’s stated target range of 2 to 3 percent.

Mortgage holders will be waiting expectantly to see if the RBA board decides to cut the official interest rate from 4.35 percent as mortgage stress impacts an increasing number of Australians.

A recent survey by comparison site, Finder, revealed that up to four in 10 mortgage holders were contributing 40 percent or more of their income to repayments. Mortgage stress is considered to have kicked in once the borrower is contributing one third or more of their income.

Following RBA board meetings in recent months, Governor Michele Bullock has stressed the board’s commitment to driving down inflation. With yesterday’s inflation figures better than anticipated, expectations of a drop have risen. However, despite inflation sitting at the lowest level since March 2021, economists have cautioned that a cut before Christmas is unlikely.

“Short of substantially higher unemployment, lower underlying inflation or an external shock, the RBA is likely to remain on hold in the months ahead as the board look to sustainably return inflation to the target range,” REA Group senior economist Eleanor Creagh said.

The cautionary approach is due in part to the underlying reasons for the decline in figures, including Federal Government rebates on energy, which were a temporary measure to offset cost of living pressures.

Following the board’s last meeting in September, Ms Bullock was careful not to raise hopes of an interest rate cut before next year.

“If tomorrow we get an inflation number with a two in front of it, so it’s back in the band, that doesn’t mean that we’ve got inflation under control,” she said.

In recent months, the United States and Canada have both cut their cash rates by half a percentage point, prompting calls to do similar in Australia.

For many Australians, the 2026 Federal Budget initially felt like a direct challenge to the way wealth is created, held and transferred between generations.

The headlines were immediate: changes to capital gains tax, reforms to discretionary trusts, restrictions on negative gearing and increased scrutiny of investment structures. Unsurprisingly, affluent families, business owners and investors began asking the same question:

Is the way we hold our wealth still fit for purpose?

In recent days, the government has announced several significant amendments following industry consultation and public feedback, including exempting testamentary trusts from the proposed 30 per cent minimum tax and expanding capital gains tax concessions for small businesses.

The backdown is welcome. But it also highlights something much bigger.

This Budget has accelerated a conversation that many Australian families have been postponing for years.

The conversation is not really about tax. It is about wealth stewardship.

For decades, Australians have built wealth through businesses, property, investments and careful long-term planning. Yet many families have not revisited the legal structures surrounding those assets in years, sometimes decades.

We often see clients who have spent years building significant wealth, only to discover their legal arrangements no longer reflect their current circumstances.

Their children are now adults. They may own multiple properties.

They may have sold a business, entered a second marriage, become grandparents or accumulated digital assets that did not exist when their original estate plans were prepared.

The trust that distributes income may need to be reconsidered. The bucket company may no longer be so attractive.

The Budget has simply exposed a reality that already existed: wealth structures cannot remain static while life continues to evolve.

Importantly, trusts themselves are not the issue.

Trusts are legitimate planning tools that provide flexibility, protection and continuity. When used appropriately, they allow families to adapt to changing circumstances over time.

And neither is tax the issue, really. Getting the fundamentals right is more important for long-term, sustainable wealth than a few favourable tax treatments around the edges.

The real issue is complacency.

Too often, families create structures and assume the job is done. It isn’t.

Estate planning is no longer a document you sign once and file away in a drawer. It is an ongoing process that should evolve alongside your life.

We are also seeing a broader shift in how Australians define wealth itself. It is no longer just the family home and an investment portfolio.

Modern wealth includes businesses, digital assets, cryptocurrency, intellectual property, frequent flyer points and increasingly complex family arrangements.

At the same time, Australians are living longer than ever before, meaning wealth may need to support multiple generations simultaneously. This creates new responsibilities and new risks.

How do you help your children enter the property market without exposing family wealth to relationship breakdowns?

How do you structure wealth so that it remains a source of opportunity rather than future conflict?

These are the questions families should be asking now.

The recent debate surrounding testamentary trusts also serves as an important reminder that policy decisions can have unintended consequences for vulnerable Australians. It is encouraging that the government has listened to feedback and clarified its position.

But the lesson remains: the wealth landscape is changing.

Increasingly, governments, regulators and tax authorities are paying closer attention to how wealth is held and transferred. That means families cannot afford to adopt a “set-and-forget” approach to their structures.

The families who will be best placed for the future are not necessarily those with the greatest wealth.

They are the families with the greatest clarity. Clarity around ownership, succession and governance. And clarity around how wealth will transition from one generation to the next.

Ultimately, preserving wealth is not about avoiding change.

It is about preparing for it.

Because the greatest risk is not change itself.

It is losing the ability to respond to it.

Anthony Hunt is Co-Founder of Wealth Lawyers and former COO of Westpac Private Bank. He advises business owners, investors and affluent Australian families on wealth protection, succession planning and intergenerational wealth transfer

Hoping for a rate cut before Christmas? Don’t hold your breath

While inflation has hit its lowest point since March 2021, the RBA is likely to exercise caution when it meets next week

The Federal Budget may have softened some of its proposed tax reforms, but it has exposed a bigger issue: too many families are relying on wealth structures that no longer reflect the realities of modern life.