Experts are predicting a significant interest rate cut from the Reserve Bank of Australia (RBA) during its upcoming meeting next week. A recent survey conducted by Finder revealed that 91% of 34 economists and financial specialists surveyed anticipate a reduction of 25 basis points that would lower the official cash rate to 3.60%.
Should banks fully implement this cut, homeowners with a $500,000 mortgage could save approximately $2,884 annually compared to their repayments earlier this year, before the RBA initiated its rate reductions.
Previous expectations for a cut were thwarted last month, with the cash rate remaining steady at 3.85%, surprising many mortgage holders. Nonetheless, experts believe the RBA has ample justification to lower the rate this time, citing decreasing inflation rates and a softening employment market as key factors.
However, some dissenting voices exist, notably Stella Huangfu from the University of Sydney, who predicts the RBA will maintain the current rate. She points out that the annual Consumer Price Index (CPI) inflation is still above the RBA’s target range, currently at 2.7%. Furthermore, with two rate cuts already implemented, there may be a desire among central bankers to pause and evaluate the broader economic landscape.
Graham Cooke, head of consumer research at Finder, indicates that if the RBA opts not to cut the rates next week, it risks losing credibility with homeowners. He suggests that those with mortgages exceeding 5.5% after a potential reduction may be overpaying. Looking ahead, an overwhelming majority of analysts (80%) believe the RBA will hold the cash rate stable in the following month.