Experts Tip RBA Rate Cut Soon

Posted on 10/02/2019  
Experts Tip RBA Rate Cut Soon

The Reserve Bank of Australia (RBA) kept the official interest on hold on 5 February but a reduction in the cash rate seems more likely now than it has in years, according to comparison website Finder.

All 28 experts and economists in Finder's RBA cash rate survey correctly predicted that the RBA would hold at 1.50% on Tuesday, but their predictions swung dramatically about the direction of the next move to come.

For the past two years, about 80% of experts have predicted an increase as the next cash rate move by the RBA. But this month, only 11 of the 28 experts did so.

Stephen Koukoulas, managing director at Market Economics, says he could see a change happen as soon as next month. "The RBA will acknowledge the economy is weaker than when it last met and will signal a change in bias towards an easing,” he says.

Graham Cooke, insights manager at Finder, says that the panellists who put a date on their rate drop predictions were evenly spread throughout the year from March to November. 

“This is the most dramatic shift I have seen in four years of running our cash rate survey,” he says. “Economists are now swinging significantly in favour of a rate cut this year, but nobody can agree on exactly when this will happen.”

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