Mortgage holders in Australia expecting interest rate relief from the Reserve Bank of Australia’s (RBA) upcoming meeting are likely to be disappointed. A recent Finder survey, involving 34 economists, indicates that around two-thirds believe the RBA will keep the cash rate steady at 4.10 per cent during its announcement next Tuesday.
This marks a significant shift in expectations, particularly after last month’s long-awaited interest rate reduction, which had led many to hope for consecutive cuts. Graham Cooks, Finder’s head of consumer research, suggested that mortgage holders may have to wait until May for any further reductions. He noted that while the February cut was expected to be a turning point for struggling borrowers, recent inflation figures indicate stability, diminishing chances for another cut in April.
Despite the general consensus to maintain rates, six economists argue in favour of a rate cut, pointing to newly released unemployment figures that remain unchanged at 4.1 per cent as a potential justification. Industry expert Leanne Pilkington highlighted that the sustained cost of living pressures and moderating inflation, combined with the flat employment numbers, could provide the RBA with a viable opportunity to act sooner than later.
Geoffrey Kingston, from Macquarie University’s Business School, opined that while another cut is anticipated, it may not happen immediately, as the RBA would likely prefer to keep a low profile during the electoral campaign leading up to the May 3 election announcement by Prime Minister Anthony Albanese.
Looking further ahead, around two-thirds of economists predict two or three more cash rate cuts throughout the year. A resounding 93 per cent of participants believe banks will fully pass on any future rate cuts to consumers, providing a glimmer of hope for mortgage holders once the RBA decides to lower rates again.
In summary, while a majority expect the RBA to hold the cash rate steady next week, there are subtle indications that cuts may still be on the horizon in the near future, contingent upon evolving economic conditions.