Prepare for interest rate cuts: the US is set to begin, and Australia is likely to follow suit.

Just three weeks ago, Reserve Bank Governor Michele Bullock stated that interest rate cuts were unlikely in the next six months. However, any uncertainty about global interest rates was cleared up on Saturday by US Federal Reserve Chair Jerome Powell. Speaking to an audience of central bankers, including Australia’s Reserve Bank Deputy Governor Andrew Hauser, Powell announced that the long-awaited US rate cuts are imminent.

“The time has come for policy to adjust,” Powell said with clear and unambiguous language. “The direction of travel is clear, and the timing and pace of rate cuts will depend on incoming data, the evolving outlook, and the balance of risks.”

The anticipated rate cuts by the US Fed and other central banks will likely exert significant pressure on Australia’s Reserve Bank to follow suit.

My prediction? Australians might see a rate cut as early as Melbourne Cup Day, Tuesday, November 5. Here’s why.