It’s another D-Day for interest rates but the Reserve Bank of Australia (RBA) is unlikely to deliver cost of living relief to millions of Aussies.
In line with its new meeting schedule, the RBA board commenced its two-day meeting yesterday, with its decision to be announced at 2.30pm today.
In a big change for 2024, the RBA board will only meet eight times a year, or roughly once every six weeks, rather than on the first Tuesday of every month, except in January, as it previously did.
The consensus among all 41 economists surveyed by Finder is for the RBA to leave the official cash rate on hold at the current level of 4.35 per cent.
Markets are continuing to price the first interest rate cut to come from the RBA in September, but a handful of economists are of the view that the first interest rate cuts won’t come until 2025 due to inflation remaining stubbornly high.
Inflation is currently running at 4.1 per cent, well above the RBA’s target band of between two and three per cent.
In fact, some economists are even warning the next move on interest rates could be another rise, rather than a cut.
Judo Bank chief economic advisor Warren Hogan told The Australian Financial Review the next move the RBA makes could be to increase interest rates in the middle of the year, if economic growth picks up.
“We’ve only had one rate hike since July 2023, and we know that we’re going to get a big boost to disposable incomes, starting on July 1 this year with the tax cuts,” Mr Hogan said.
“And, of course, what the national accounts show, along with other data, is the rest of the economy [outside the household sector] is doing fine.”
Mr Hogan was found to be the most accurate RBA cash rate economic forecaster out of 29 economists ranked by The Australian Financial Review in 2023.
When announcing the decision to keep interest rates on hold following the last RBA board meeting on February 6, RBA governor Michele Bullock warned Australians the prospect of “a further increase in interest rates cannot be ruled out”.
She described the outlook as “highly uncertain”, adding that the RBA was still “highly attentive” to inflation.
The last consumer price index statistics released, for the three months to December 2023, showed inflation had fallen by 0.6 per cent since the end of September.
The next set of inflation data, for the first three months of 2024, will be released in April, ahead of the RBA’s next board meeting on May 7.
