Cash rate unlikely to be dropped

by Julia Corderoy31 Aug 2015
The cash rate is tipped to remain on hold at its record low when the Reserve Bank meets tomorrow. However, the housing market isn’t likely to receive any spring time surge. 

All but one economist in’s monthly Reserve Bank survey expect the cash rate to remain on hold at 2% as we enter the first month of spring, as the central bank continues to assess the impact of the latest two rate cuts in February and May. The one remaining respondent expects the market will see a cash rate drop.

But despite the cash rate being tipped to remain on hold at its historical low, the majority of the economists and analysts surveyed don’t think it is likely to affect the housing market and cause a spring time surge in home sales.

Just under 60% expect auction clearance rates to remain stable at its current level, while more than one in three experts (34%) expect auction clearance rates will drop.

Looking ahead, almost eight in ten (78%) expect that the cash rate will remain on hold for the remainder of 2015, while 5% say the Reserve Bank is still likely to drop the cash rate. 

Looking even further ahead and more than half (56%) believe that 2016 will be the year the cash rate will begin to rise, with the fourth quarter of the year the most likely period for this to happen.

Thirty-two economists and analysts participated in this month’s Reserve Bank survey.