He calls for lower inflation, interest rate cuts, and cautious government spending to support small business growth
As the new year approaches, Banjo Loans chief executive Guy Callaghan (pictured above) has shared his outlook for small and medium-sized enterprises (SMEs) in 2025, unveiling a “wishlist” focused on economic stability and growth.
The non-bank lender’s leader highlighted core inflation, interest rates, government spending, and the job market as pivotal factors for SME success in the coming year.
Core inflation decline
Callaghan expressed optimism about the continued decline in core inflation, which he believes will provide SMEs with greater pricing stability.
“My hope for 2025 is that further reductions in inflation rates will support SME businesses, allowing them to plan with greater confidence and to set prices without the fear of sudden, unexpected increases,” he said.
Caution on government spending
With a federal election on the horizon, Callaghan urged the government to avoid unnecessary spending that could exacerbate inflationary pressures.
“While in the short term, government support might feel beneficial to consumers, increased spending will only serve to negatively affect core inflation,” he said. “This will continue to delay much-needed interest rate cuts. For SMEs to thrive, we need a stable economic environment nationally before we consider any additional government handouts.”
Interest rate relief
Callaghan also underscored the importance of interest rate cuts in early 2025, describing them as critical for SME growth.
“If the data trends favourably, a reduction early in 2025 could deliver the relief that SMEs desperately need,” he said. “This would help businesses reassess financial strategies and invest in growth opportunities.”
Job market adjustments
The strength of the job market remains a key focus for the Reserve Bank of Australia (RBA) and SME owners alike. Callaghan noted that slower wage growth could ease financial pressures and influence monetary policy decisions positively.
“Job market data is another key focus area for the RBA,” he said. “Wage growth continuing to slow will not only please the RBA, but should also please SME business owners and take some pressure off their finances.”
Preparing for the future
Looking ahead, Callaghan encouraged SMEs to stay proactive and adaptable in light of shifting economic conditions.
“With insights into inflation, government spending, interest rates, and job market dynamics, businesses can better prepare for the challenges and opportunities on the horizon,” he said. “As we look ahead to the new year, it’s clear that addressing these critical factors will be vital for the resilience and growth of SMEs in Australia.”
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