The official cash rate is likely to remain on hold in May, and the experts now think there might not be a rate cut at all in 2024.
According to Finder’s RBA Cash Rate Survey, 36 experts expect the RBA to leave the official cash rate at 4.35 per cent at the May meeting.
Finder Head of Consumer Research, Graham Cooke, said hope of a near-term rate cut was quickly fading.
“Promising signs of inflation starting to ease were dampened by higher than expected figures from the March quarter,’ Mr Cooke said.
“The inflation rate is the one number the RBA is most influenced by, so it’s unlikely we’ll see a rate cut until at least December, if not later.”
Macquarie University Business School Professor, Geoffrey Kingston, said the CPI report for the March quarter was ugly and that it may not be cuts on the way, but rather hikes from the RBA.
“News from overseas was similarly bad,” Professor Kingston said.
“On the other hand, March retail sales were weak.
He said the RBA would probably sit on its hands for several months.
“However, ongoing high government spending and the July tax cuts may combine to force a rate rise sometime this summer,” he said.
AMP Economist, Shane Oliver, said he still expected a rate cut this year.
“Inflation is still coming down so we still expect a rate cut this year, but March quarter inflation was higher than expected particularly for services inflation and so we have delayed our expectation for the first rate cut to year end,” Mr Oliver said.
REA Group Economist, Cameron Kusher, said high inflation is still an issue for the RBA.
“I think the RBA will re-enter a hiking bias in the latest minutes due to the stronger than anticipated CPI numbers but I don’t see them hiking yet,” Mr Kusher said.
“Equally the strong CPI and the looming tax cuts, plus whatever is announced in the Federal Budget is likely to push rate cuts out further.”
LJ Hooker Group, Head of Research, Economics & Business Intelligence, Mathew Tiller, said inflation continues to trend lower on an annual basis;
“However, the higher-than-expected March 2024 quarterly CPI data result means that the RBA will be cautious about cutting rates too soon,” Mr Tiller said.
“Therefore, it’s likely that the RBA will hold the cash rate steady for the majority of 2024.”
Moody’s Analytics Economist, Harry Murphy Cruise, said Australia is joining a growing list of economies proving that the final mile of bringing down inflation is the hardest.
“Having sprinted lower in the back end of 2023, headline inflation is struggling to keep that momentum going,” Mr Murphy Cruise said.
“Inflation will keep easing from here, but progress will be slow.
“From 3.6 per cent in the March quarter, we see inflation ending the year at 3.2per cent and returning to the top of the Reserve Bank of Australia’s target band of 2 per cent to 3 per cent in the first half of 2025.”
He said the first rate cut might not happen until December.
