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RBA set to hold cash rate: survey

by Francesca Krakue8 minute read
The Adviser

100% of the experts surveyed by financial comparison website finder.com.au have predicted ‘no change’ to the official cash rate today.

All 38 experts surveyed by finder.com.au believe that the Reserve Bank will choose to hold the official cost of borrowing at 1.50 per cent at today’s monthly board meeting.

Many of the experts cited soft inflation and a stubborn Australian dollar as the reason the RBA will choose to hold the rate, explaining that the bank remains in ‘wait and see’ mode.

CommSec economist Savanth Sebastian commented: “[The] RBA will want to see how the economy responds to the last two rate cuts in a post-election environment. Inflation outcomes will be key to next move on rates.”

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Robert Montgomery of Infrastructure Partnerships Australia echoed this sentiment, adding: “The RBA will hold rates at 1.50 per cent after last month’s cut and wait to see how inflation responds.

“However, due to broader economic factors, monetary policy is unlikely to stimulate inflation in the near-term, meaning that the RBA will be cautious about further rate cuts in the near future,” he explained.

Liberty’s Lynne Jordan elaborated that there will be an increasing need for the government to use other measures such as fiscal stimulation if it is going to succeed in its objectives to return the economy to benchmark GDP growth whilst also fighting deflation.

“Rumours of a rate hike in the US are expected to apply downward pressure on the Australian dollar, meaning the Reserve Bank’s timeline for an additional rate cut could be pushed back to early next year,” Ms Jordan added.

[Related: RBA rate cut ‘completely wasted’]

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