More than 40% of economists see rate cut on horizon

by Maya Breen02 Mar 2015
More than 40% of economists are expecting another cash rate cut when the RBA meets tomorrow.

Comparison website has released results from its latest Monthly Reserve Bank Survey. Of 37 leading experts and economists in the Reserve Bank survey panel more than half (57%) are expecting the cash rate to hold while 16 experts (43%) are betting on a cut.
Further rate cuts are likely to result in higher property prices, according to with first home buyers likely to drop for the third year in a row.
Among the major four banks, chief economists from ANZ, Commonwealth Bank and Westpac expect the cash rate to fall on Tuesday while National Australia Bank’s chief economist Alan Oster is forecasting no change.
“It will take some time to see the impact of the February cut,” Oster said.
“They've signalled that the economic outlook is a little bit weaker than they have previously been expecting. They've factored in to their predictions further cuts to interest rates and so there's little reason to wait. They tend to cut back to back when they begin a new cycle – historically,” ANZ ‘s Warren Hogan said.
RBA has an easing bias and with the recent lift in unemployment the incentive is there to add some extra stimulus,” Commonwealth Bank’s Michael Blythe said.
Bill Evans of Westpac said, "A key issue is whether the Bank sees adverse development as reason to further downgrade its already pessimistic outlook for the labour market or is inclined to dismiss it as “one month” volatility.” money expert, Michelle Hutchison said first home buyers will need to work harder to jump onto the property ladder this year, with fewer first home buyers expected to enter the market.
“With the majority of the 37 experts in the Reserve Bank Survey expecting another cash rate cut by June this year and most of these experts are also predicting property prices to rise as a result, first home buyers face bigger hurdles to enter the market,” she said.
“First home buyers will need to work harder than previous years, with fewer government incentives and higher property prices adding greater pressure on these Australians.”