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Experts unanimously agree that the Reserve Bank of Australia will leave the cash rate on hold today, but have forecast that another cut is only months away.
According to the results of a survey by comparison website finder.com.au, all 31 participants made up of economists and commentators expect the cash rate to remain at the record-low 1.75 per cent following a 25 basis point cut last month.
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The majority of respondents cited a need to “wait and see” what impact the May rate cut will have on the economy as the reason why the RBA would hold the cash rate at today’s monthly board meeting.
“RBA to take a wait-and-see approach after last month’s cut with data remaining mixed,” Domain chief economist Andrew Wilson said.
BIS Shrapnel’s Richard Robinson said the May cut successfully engineered a fall in the Australian dollar, which the RBA desired.
“Although inflation is low, deflation is unlikely (oil prices have already risen sharply since January) and the economic growth is sufficient to prevent a marked increase in the unemployment rate. Better to leave some rate cuts for later, when they might need them,” Mr Robinson said.
The survey also revealed that while all participants expect the cash rate to remain steady for June, 68 per cent believe it will drop again this year.
Of the 21 experts who are predicting another cash rate cut in 2016, 45 per cent have tipped for it to occur in August, while 12 per cent reckon the cut will come in September, and 13 per cent expect the RBA to wait until November.
