RBA to cut the cash rate again

by Julia Corderoy06 Jun 2016
Last month’s surprise cash rate cut is unlikely to be the last for 2016, according to a survey of leading economists and analysts.

While all 31 experts in the finder.com.au Reserve Bank Survey are forecasting the cash rate will hold at the new historic low of 1.75% when the RBA meets tomorrow, 68% predict there’s a further cut on the way this year.

Almost half of those who predict another cut (45%) are tipping August as the month the central bank will make its move. Ten percent are forecasting September for a rate drop, while 13% think it won’t come until November. 

“It’s hard to ignore the downgraded inflation forecasts the Board issued earlier in the month, although I still don’t see another cut coming until at least August,” chief operating officer of Liberty, James Boyle said. 

“This is despite jobs growth and unemployment remaining modest, but steady, and wage growth continuing to slow.”

As for how low the cash rate may drop this cycle, the majority (60%) are forecasting it will fall to 1.50%, while 12% believe there’s scope for the cash rate to cut to even lower than this. 

When asked about recent warnings that Australian property market prices could rise by 10% by 2020, just over one third (35%) agreed with this prediction. Thirty percent of experts are forecasting a rise of 5% by 2020, while a quarter predict no change or a drop in house prices between now and then.