Brokers expect a quiet month for the RBA

Mortgage brokers are expecting to see the Reserve Bank of Australia (RBA) continue to hold the cash rate steady at 4.35 per cent in its second monetary policy meeting of the year (19 March).

Although RBA governor Michele Bullock stated after the February monetary policy meeting that interest rate cuts may occur before inflation returns to target, the consensus among the market, economists, and brokers still sees a rate hold in March.

Speaking to The Adviser, Resolve Finance mortgage broker and franchise owner Niti Bhargava said she believes a hold is imminent due to the inflation rate getting closer to the target band of 2–3 per cent.

“Secondly, we really need to see the stability in the market now,” Bhargava added.

“By slashing rates from the middle of this year, [it] will assist a lot of clients [in gaining] their market confidence back and help them get over serviceability issues to fulfil the Australian dream of owning a home.”

Mortgage Choice Manuka principal Matthew Hayes said it’s unlikely that a change in the cash rate will occur this month.

“The latest GDP data released in February shows a modest increase of just 0.2 per cent for the December quarter. This represents the slowest pace of economic growth we’ve seen in more than two decades,” Hayes stated.

“Such a subtle upturn signals that the recent interest rate hikes are beginning to achieve their intended effect. The primary goal behind these increases is to temper the economy’s expansion, curb consumer spending, and bring property prices under better control.

“The emerging trends from the GDP figures suggest these measures are starting to work. However, despite these promising signs, I remain cautious in my outlook.”

Hayes added that he expects the RBA to cut rates “two to three times this year” based on reviewing indicators of inflation, employment, and GDP growth.

“My prediction is that I am expecting them to hold the current rates until September to allow time for the economy to stabilise before a rate cut in October, being cautious of economic growth as it is imperative they don’t go early or they could potentially heat up the market too fast,” he said.

Echoing these sentiments, Home Loan Experts chief executive Alan Hemmings said he expects a “boring month” of no change.

“We are seeing lenders start to drop fixed rates, which is normally an indication of where rates are heading. I think it will be a timing thing,” Hemmings added.

The board meeting is set to commence by this afternoon (Monday, 18 March) and continue through to Tuesday (19 March) morning.

The outcome is scheduled to be announced on 2:30 pm on the second day.

[RELATED: Rate cuts may come sooner than expected: Bullock]

Written by Adrian Suljanovic

Last Updated: 15 March 2024

Published: 18 March 2024