Interest rates hold for April following RBA meeting

The RBA has decided to keep interest rates on hold following a meeting of the board this afternoon. In a widely anticipated move and amid growing pressure from government and key players in the housing sector, the Reserve Bank of Australia has broken a 10-month streak of consecutive rises in the cash rate, leaving interest rates at 3.6 percent.

In a statement released earlier today, governor of monetary policy at the RBA, Philip Lowe, reaffirmed last month’s assertion that ‘monetary policy operates at a lag’ but said it was likely that inflation in Australia has already peaked, with further falls expected over the course of this year and next.

Inflation hit a high of 8.4 percent in December 2022 but fell slightly in January to 7.4 percent and again in February to 6.8 percent.
“Goods price inflation is expected to moderate over the months ahead due to global developments and softer demand in Australia,” Mr Lowe said in a statement.

“Meanwhile, rents are increasing at the fastest rate in some years, with vacancy rates low in many parts of the country. The prices of utilities are also rising quickly.

“The central forecast is for inflation to decline this year and next, to around 3 percent in mid-2025. Medium-term inflation expectations remain well anchored, and it is important that this remains the case.”

The news has been received positively by the building and property sectors.

Master Builders Australia CEO Denita Wawn said the decision to pause a further rise was welcome.

“Interest rate rises coupled with rising inflation have forced building and construction activity and new homes sales to slow sharply over the last few months,” she said in a statement.

“A strong building industry is the foundation of a strong economy. The close interdependence between the health of the construction industry and the economy’s fate is clear to see in the current environment.

“The RBA has rightfully recognised the negative impacts of rapidly rising interest rates on accelerating rental prices and construction activity.”

CoreLogic research director, Tim Lawless, said the decision would boost confidence in the property market ahead of further falls in the rate of inflation.

“An increased level of certainty around the rate hiking cycle should flow through to an improvement in consumer sentiment, which has been stuck at levels seen during the worst of the Global Financial Crisis and early phase of the pandemic,” he said.

“We know that consumer sentiment and housing market activity have a close relationship, so any upwards movement in spirits could see more buyers and sellers returning to the market, although we would need to see sentiment lift materially before returning to average levels.”

The boom in casual footware ushered in by the pandemic has ended, a potential problem for companies such as Adidas that benefited from the shift to less formal clothing, Bank of America says.

The casual footwear business has been on the ropes since mid-2023 as people began returning to office.

Analyst Thierry Cota wrote that while most downcycles have lasted one to two years over the past two decades or so, the current one is different.

It “shows no sign of abating” and there is “no turning point in sight,” he said.

Adidas and Nike alone account for almost 60% of revenue in the casual footwear industry, Cota estimated, so the sector’s slower growth could be especially painful for them as opposed to brands that have a stronger performance-shoe segment. Adidas may just have it worse than Nike.

Cota downgraded Adidas stock to Underperform from Buy on Tuesday and slashed his target for the stock price to €160 (about $187) from €213. He doesn’t have a rating for Nike stock.

Shares of Adidas listed on the German stock exchange fell 4.5% Tuesday to €162.25. Nike stock was down 1.2%.

Adidas didn’t immediately respond to a request for comment.

Cota sees trouble for Adidas both in the short and long term.

Adidas’ lifestyle segment, which includes the Gazelles and Sambas brands, has been one of the company’s fastest-growing business, but there are signs growth is waning.

Lifestyle sales increased at a 10% annual pace in Adidas’ third quarter, down from 13% in the second quarter.

The analyst now predicts Adidas’ organic sales will grow by a 5% annual rate starting in 2027, down from his prior forecast of 7.5%.

The slower revenue growth will likewise weigh on profitability, Cota said, predicting that margins on earnings before interest and taxes will decline back toward the company’s long-term average after several quarters of outperforming. That could result in a cut to earnings per share.

Adidas stock had a rough 2025. Shares shed 33% in the past 12 months, weighed down by investor concerns over how tariffs, slowing demand, and increased competition would affect revenue growth.

Nike stock fell 9% throughout the period, reflecting both the company’s struggles with demand and optimism over a turnaround plan CEO Elliott Hill rolled out in late 2024.

Investors’ confidence has faded following Nike’s December earnings report, which suggested that a sustained recovery is still several quarters away. Just how many remains anyone’s guess.

But if Adidas’ challenges continue, as Cota believes they will, it could open up some space for Nike to claw back any market share it lost to its rival.

Investors should keep in mind, however, that the field has grown increasingly crowded in the past five years. Upstarts such as On Holding and Hoka also present a formidable challenge to the sector’s legacy brands.

Shares of On and Deckers Outdoor , Hoka’s parent company, fell 11% and 48%, respectively, in 2025, but analysts are upbeat about both companies’ fundamentals as the new year begins.

The battle of the sneakers is just getting started.

Interest rates hold for April following RBA meeting

It’s welcome news for mortgage holders amid cost of living pressures

The pandemic-fuelled love affair with casual footwear is fading, with Bank of America warning the downturn shows no sign of easing.