CEO Survey 2025: Epic inflation fight is ‘far from over’

The nation’s biggest poll of business leaders comes with a pointed warning for both sides of politics heading into an election year.

The Australian’s CEO Survey 2025: Meg O’Neill of Woodside, Commonwealth Bank’s Matt Comyn, Ampol boss Matt Halliday, and Shell’s Cecile Wake

Australia’s top business leaders have sounded the warning on inflation, with pressure through the economy still real and undermining the case for early interest rate cuts, and the economy still growing but in a fragile state heading into 2025.

They have also urged restraint on excess government spending heading into an election year, given the impact on inflation.

Higher public spending at federal and state level is crowding out business from the jobs market and hurting efforts to reboot productivity.

The Australian’s exclusive annual poll of the nation’s top business leaders has found while the economy may have passed the worst of the downturn, there are serious risks ahead.

The biggest of these is inflation is staying higher for longer, which is seriously harming households in the form of cost-of-living pressures.

There is also rising concern that the threat of tariffs from a US-led trade war could hurt the global economy.

And while the Reserve Bank is expected to finally offer some relief with interest rate cuts next year, they caution this could take longer than many are predicting.

Woodside Energy CEO Meg O'Neill. Picture Marie Nirme

The Australian’s CEO Survey 2025 spoke in depth to more than 70 of the nation’s business leaders from mining, energy, banking, manufacturing and retail, on the economy as well as their plans for investment, reform and the rise of Donald Trump.

The series will continue over the next week in print and across digital channels, including the CEOs’ own answers.

The survey is the most comprehensive insight into the mood of the nation’s top employers, and delivers a direct line into the boardroom of corporate Australia.

In general there is a note of cautious optimism going into 2025 among corporate leaders, marking a contrast from this time last year, and this means confidence is rising in order to invest again.

But they overwhelmingly say it will be some time before the Australian economy can reach full potential.

Todd Barlow, Soul Patts CEO in Sydney. Picture: John Feder/The Australian.

Commonwealth Bank chief executive Matt Comyn said households and businesses remained under acute pressure following years of low growth and high cost environment.

“It is critical for the long-term health of the economy and the country that we bring inflation under control,” he said.

The survey follows figures released this month that show the economy has been stuck in a slow growth cycle, with annualised growth just 0.8 per cent.

This is below official forecasts with high levels of government spending, helping Australia slip into a recession.

While the weak growth has paved the way for early interest rate cuts, further signs of labour market resilience have again pushed market betting on cuts towards May.

Many CEOs The Australian spoke with were tipping rate cuts to begin closer to the middle of next calendar year.

Woodside chief executive Meg O’Neill said the best way to tackle inflation over the long term was to have in place the policies to encourage productivity and investment.

“The Australian economy has all the core ingredients to gain momentum in 2025 and beyond, but we need the right policy settings to enable that momentum to take hold, and stick,” she said.

As well as measures that encourage investment in new energy supplies, “it means providing stable and certain fiscal policy that encourages investment and doesn’t discriminate”, she said.

Soul Patts chief executive Todd Barlow pointed out one of the “major drivers” of inflation was government spending across the world.

Macquarie Bank chief Shemara Wikramanayake. Picture: Britta Campion

“Australia is spending at record levels, and we really need to see lower expenditure and lower employment growth from the government to reduce interest rates,” he said.

Mr Barlow said he saw greater risk to higher inflation and higher interest rates than what the market is forecasting.

Rate easing

Ampol boss Matt Halliday was among the more cautious of the chief executives surveyed.

His read on the economy is one that is softening heading into 2025 with the headwinds of higher interest rates and inflation still hurting household confidence.

“GDP per capita is going backwards, and although inflation is coming down it remains too high,” he said.

“We need real focus and discipline on the demand and supply sides of the economy to enable the forecast interest rate cuts that will assist in stimulating the economy.”

Macquarie Group chief executive Shemara Wikramanayake is optimistic the Australian economy is starting to turn the corner. Tax cuts and abating inflation has begun to stoke consumer spending.

Ampol CEO Matthew Halliday. Picture: Toby Zerna

The Macquarie boss expects the Reserve Bank to start cutting rates toward the middle of next year. This “should help further ease the pressure on household budgets and provide some support to housing market activity”.

Mining boss Graham Kerr of South32 also said the official cash rate – sitting at 4.35 per cent since November 2023 – should start easing in coming months.

However, he cautioned the cuts would be at a “moderate pace”. “There is not a strong impetus to match the pace of other central banks, with Australian GDP growth forecast to be relatively robust,” Mr Kerr said.

Greg Goodman, who heads up global commercial property major Goodman Group, told the CEO Survey 2025 “momentum in the Australian economy is relatively subdued, with little relief in regard to cost of living and housing”.

“This is symptomatic of the conversation around interest rates which aren’t abating as quickly as the market would like,” he said.

Mark Ellenor, the newly appointed boss of Brickworks, one of the nation’s biggest building materials manufacturers, was cautiously positive about the momentum of the Australian economy.

He believed housing affordability and a tight labour market represented longer-term structural issues for the economy.

If inflation continued to cool, a rate reduction sooner than later “would make sense to support growth”, he said.

“From a business perspective, we’re seeing inflationary pressures starting to ease in some areas,” he said. “That said, we continue to face higher input costs in areas like wages and logistics, which are likely to remain into 2025.”

Greg Goodman, Head of Goodman Group. Picture: John Feder

This week, RBA governor Michele Bullock said inflation risks have may have eased “but they haven’t gone away”.

While underlying inflation was well down from its peak of near 8 per cent two years ago, at 3.5 per cent it was still above the central bank’s target band.

Shell Australia chief executive Cecile Wake said even with CPI starting to trend down, “cost-of-living pressures are pulling on real wages and Australians are feeling the pinch”.

Falling productivity was emerging as a “real threat to our economy” and this would hurt the standard of living enjoyed by Australians for many decades.

ANZ chief executive Shayne Elliott, who this week flagged plans to step down mid next year, said economies around the world appeared to have avoided deep recessions, even with one of the highest interest rate cycles in decades. But he believed cost-of-living pressures and input costs for businesses were not going away.

“Looking ahead into 2025, I would rate our economic momentum as mildly stronger than the year just gone,” the ANZ boss said.

“The main improvement we are starting to see is a pick-up in consumption after a period of weakness, which is promising.”

This weekend: The case for reform; Trump impact and CEOs in their own words.

Originally published as CEO Survey 2025: Epic inflation fight is ‘far from over’