Mortgage holders will likely receive another payment relief when the central bank convenes, with experts anticipating a pause in interest rates. According to a survey conducted by financial comparison site Finder, 27 experts predict that the Reserve Bank of Australia (RBA) will maintain the cash rate at 4.35 per cent during its upcoming Tuesday meeting. Additionally, major banks, including the Commonwealth Bank, Westpac, and NAB, also foresee a rate hold.
This expectation follows the release of the Australian Bureau of Statistics (ABS) most recent quarterly inflation data, which reported a decrease in the December quarter to 4.10 per cent from the previous 5.40 per cent in the September quarter.
Independent economist Saul Eslake expressed his views via Finder, stating that the figures from the December quarter were sufficient to eliminate any slight possibility of the RBA increasing rates. However, Eslake believes that the data, in his opinion, does not justify expecting a rate cut at the upcoming meeting.
When, and how far, could interest rates fall?
While economist Saul Eslake holds the belief that the RBA will not decrease rates in the current year, contrasting viewpoints emerge from major banks. NAB, Westpac, and the Commonwealth Bank indicate the possibility of a rate cut.
According to rate comparison website Mozo, Westpac and the Commonwealth Bank anticipate the initial cut to occur in September, with rates reaching 4.10 per cent. NAB, on the other hand, foresees a 0.25 per cent reduction in December.
Looking ahead, the Commonwealth Bank projects a potential decline to 2.85 per cent by June 2025. In contrast, Westpac suggests a decrease to 3.10 per cent in September of the following year, while NAB predicts a similar fall to 3.10 per cent in December 2025.
Among Finder’s panel of 27 experts, ten predict that the initial rate cut will occur in 2025. ANZ has not yet disclosed its predictions regarding the matter. The Reserve Bank of Australia (RBA) has been increasing interest rates in an effort to steer inflation back into its targeted range of 2-3 per cent.
State premiers call for interest rate cuts
Queensland Premier Steven Miles has implored the central bank to cut rates. “The Reserve Bank needs to start cutting interest rates now to take pressure off households,” he posted on social media on Thursday.
In response to inquiries about the appropriateness of state Labor premiers from Queensland, Victoria, and Western Australia advocating for a rate cut before the RBA’s upcoming meeting, federal frontbencher Jason Clare expressed his belief that a decrease in rates is desired by all Australians. However, he emphasized that the decision ultimately rests with the RBA.
Clare conveyed this sentiment during an interview on the Seven Network’s Sunrise program, stating, “To get them to cut interest rates, we have to get inflation down – that’s happening.”
On a separate occasion, Federal Opposition leader Peter Dutton, speaking on Nine’s Today show, suggested that the premiers should focus on addressing issues within their states, such as ambulance ramping and youth crime, rather than urging for a rate cut. Dutton emphasized the importance of the Reserve Bank’s independence to prevent political interference. Nevertheless, he acknowledged that the Coalition also desires a decrease in rates.
