Yahoo Finance What to expect from the RBA interest rate decision
Will the RBA hike, hold or cut the official interest rate tomorrow?
Aussies could be in for some much-needed relief when the Reserve Bank (RBA) meets tomorrow to make a decision about the official interest rate.
The RBA meets on the first Tuesday of every month (except January, when they take a break), to decide on the next move for interest rates. But this month is a little different.
Usually, economists mostly agree about whether the RBA will cut, hold or hike the cash rate, but with inflation falling (albeit devastatingly slowly) and the cost of living weighing heavily on households, experts are torn.
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In this month’s Finder RBA Cash Rate Survey, 42 experts and economists weighed in on future cash rate moves and other issues relating to the state of the economy.
Two thirds of the panel (62 per cent) predicted another cash rate hike, with the majority (60 per cent) forecasting another increase of 25 basis points – bringing it to 3.85 per cent in April.
For the first time since May 2022, more than a third of panellists (38 per cent) believed the RBA would hold the cash rate on Tuesday.
Graham Cooke, head of consumer research at Finder, said this was the “most divided the panel has been since before the cash rate started to rise” in May last year.
“More than 85 per cent of economists have expected a cash rate increase every month since June 2022. This result of 62 per cent is the softest forecast we have seen for an increase since then and could very well be the month the pressure stops mounting on Aussie homeowners,” he said.
Cooke said the panel had missed rate rises in the past, and household budgets were being spread thin.
“Just one in five experts expected a rate rise in May 2022, when the RBA started this rate-rise marathon. Tuesday’s decision really is an either-way bet,” Cooke said.
“Currently, financial stress is at a four-year high, with four in five Australians somewhat or extremely stressed with their financial situation.”
Angela Jackson from Impact Economics and Policy said the RBA had a lot to weigh up this month, and that, while the case for pausing was strong, actions from overseas banks suggested it would be unlikely the RBA would pause this month.
“[There’s a] good chance [the RBA raises the rate] however this will be the final increase for a while,” Jackson said.
Leanne Pilkington from Laing+Simmons said pausing the rate-rise cycle would be the right move.
“People need a reprieve and, in the housing market, buyers and vendors need to know where they stand with a degree of certainty,” Pilkington said.
Looking ahead, more than two-thirds of the panel (69 per cent) believed the RBA would hold the cash rate in May.
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