Economic and property experts have unanimously tipped the Reserve Bank of Australia will keep the cash rate on hold at its June 18 meeting, but almost one-in-five say a rate cut won’t come before July next year.
In this month’s Finder RBA Cash Rate Survey, all 38 experts and economists said the central bank would hold the cash rate at 4.35 per cent this month.
Finder Head of Consumer Research, Graham Cooke, said persistent inflation and mixed economic data led to the expert consensus.
“Despite some signs of a weakening economy, inflation remains above target, making a rate cut unlikely,” he said.
“Nobody saw COVID-19 or the war in Ukraine coming, and these have been the driving factors behind our current situation.
“What the next few months have in store will determine whether Aussie homeowners emit a sigh of relief or anxiety by year’s end.”
Mr Cooke said experts were divided on when a rate cut would occur with 18 per cent tipping rate cuts would be off the cards until July 2025 or later.
In addition, 44 per cent remained confident of a cut before the end of this year, while 38 per cent have tipped next year.
Moody Analytics’ Harry Murphy Cruise said the outlook for Australian inflation had become a little murkier.
“With inflation digging in its heels, the government is ramping up spending to bring it down faster,” Mr Cruise said.
Metropole Property Strategists’ Michael Yardney said a rate cut was unlikely until the end of 2024 or early 2025.
“They’ll likely wait to see a clearer path on inflation before making any moves in either direction,” Mr Yardney said.
But Pathfinder Consulting’s Peter Boehm said the pendulum was swinging towards an increase because of sticky inflation and a government fiscal policy, which is likely to put upward pressures on inflation.
“The possibility of another rate increase is on the cards and that will push many mortgage borrowers over the edge, and take many other Australians with them,” Mr Boehm said.
The survey also showed 38 per cent of experts don’t think Australians will be able to afford the median capital city home in 20 years time, without help from their parents or an inheritance.
“It’s difficult to see how the average income earner will be able to afford a home in 10 years if prices continue to increase at their current rates compared to wages, let alone 20,” Mr Cooke said.
“The bank of mum and dad gives a leg up to some buyers, but wealth inequality creates a disadvantage for others.”
Most experts (68 per cent) also said the rise in CPI, from 3.4 per cent in February to 2.6 per cent in April, wasn’t ringing alarm bells for the RBA.
