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Interest rates: 27 economists agree on what RBA will do for borrowers in first meeting of 2024

Most experts think mortgage holders will have to wait until the second half of the year for cash rate cuts.

All of the major banks and many economists are expecting the Reserve Bank (RBA) to cut interest rates this year, giving mortgage holders some much-needed rate relief.

All of the 27 economists and experts surveyed for Finder’s latest RBA Cash Rate Survey believe the central bank will hold the cash rate steady at 4.35 per cent when it meets next week.

The vast majority believe interest rates have now peaked, with 85 per cent forecasting the first interest rate cut will come from August onwards. It follows lower-than-expected inflation figures, with inflation dropping to 4.1 per cent in the year to the December quarter.

RBA governor Michele Bullock, interest rates, cash rate.
The RBA is expected to hold interest rates in February, with cuts forecast for August onwards. (Source: AAP)

Are you a mortgage holder dealing with rising rates? Share your story with tamika.seeto@yahooinc.com

Moody’s Analytics economist Harry Murphy Cruise said the fight against inflation was coming along “in leaps and bounds”, giving the RBA breathing room before they cut rates later in the year.

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“Progress will slow through 2024, as looming tax cuts will hand cash back to households at the exact same time the RBA is trying to take money out of the economy. That will delay Australia's first rate cut until September,” Murphy Cruise said.

Oxford Economics Australia head of macroeconomic forecasting Sean Langcake said the latest figures indicated inflation should return to the RBA’s 2 to 3 per cent target in a “tolerable” time frame.

“Inflation pressures are still relatively broad, and non-tradable inflation is uncomfortably high. But we expect the RBA will be on the sidelines until the first cut in late 2024,” Langcake said.

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University of Sydney professor of macroeconomics James Morley also thinks the first rate cut would not be until later in the year.

“Any rate cut will likely wait until other central banks such as the Fed begin lowering cycles and inflation shows further progress back to the target range. This is unlikely to be until the fourth quarter at the earliest,” Mortley said.

Other economists think rate cuts could come earlier. Stephen Koukoulas thinks the first rate cut could be on the agenda at the March and May board meetings, while AMP chief economist Shane Oliver is expecting the first rate cut in June and expects there will be three cuts in total.

What are the major banks predicting?

The Big Four bank economic teams are currently forecasting cash rate cuts in the second half of the year. But the timing and number of cuts varies.

Commonwealth Bank expects the first rate cut will come in September, with three interest rate cuts in total expected by the end of the year.

Westpac thinks the RBA will cut rates earlier in August, but thinks there will be two rate cuts in the year.

NAB forecasts just one cut in November, while ANZ thinks there will be one cut in the fourth quarter of the year.

Interest rates have skyrocketed from a record low of 0.10 per cent to 4.35 per cent since May 2022, adding $1,210 more per month to a $500,000 mortgage.

A 0.25 per cent interest rate cut would save a borrower who had a $500,000 mortgage at the start of the hikes about $74 per month on their repayments.

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