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Another hold in the cash rate is expected during the Reserve Bank of Australia’s October board meeting.
With the Reserve Bank of Australia (RBA) due to meet for its October monetary policy meeting today (3 October), predictions on the decision seem to unanimously point towards yet another hold in the official cash rate.
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The October meeting will mark the inaugural board meeting for the newly appointed RBA governor Michele Bullock following the retirement of former RBA governor Philip Lowe after his seven-year term with the central bank.
Since May 2022, the RBA has lifted the official cash rate by 400 bps, from the emergency and historical low of 0.1 per cent set during the onset of the COVID-19 pandemic, to 4.1 per cent.
According to the Finder RBA Cash Rate Survey, its respondents (38 economists and ‘experts’) have unanimously agreed that the RBA will hold the cash rate in October.
Finder noted this was the first time this year that 100 per cent of respondents agreed on a decision.
Head of consumer research at Finder, Graham Cooke, said there has been a sharp increase in stress among Australians caused by housing, energy, petrol, and grocery bills.
“Another rate hold will be welcome news to the many home owners who are already at the end of their tether,” Mr Cooke said.
“Our data shows that many households are at breaking point – 36 per cent of mortgage holders struggled to pay their home loan in September.
“Despite the RBA’s prudent pause in interest rates since July, inflationary pressures are persisting.”
Excluding NAB, major banks Westpac, ANZ, and the Commonwealth Bank of Australia (CBA) have forecast the pause in the cash rate to continue.
NAB recently updated its cash rate forecast, pushing forward the cash rate peak of 4.35 per cent to November from December 2023.
While the latest monthly Consumer Price Index (CPI) data revealed that annual inflation rose from 4.9 per cent in the 12 months to July to 5.2 per cent in the 12 months to August, Westpac chief economist Bill Evans noted that this unlikely to be enough to force the RBA’s hand towards another rate hike.
Additionally, the RBA revealed in the minutes from its September monetary policy meeting that the central bank will continue to wait and monitor the full effects of its rate hikes on the wider economy.
Mr Lowe stated in his last speech as RBA governor that the board’s members recognised the value of allowing more time to let the full effects play out due to the “lags in transmission of policy through the economy”.
[RELATED: Michele Bullock to become first female RBA governor]
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