The finder.com.au RBA cash rate survey has revealed that all 34 surveyed economists and experts expect the RBA will hold the cash rate at 1.5 per cent for May 2017 when it announces its decision tomorrow.
Looking ahead, 78 per cent of panellists predict the next change to the cash rate will be an increase. This is a slight dip from the sentiment shown in April when 86 per cent of panellists predicted the next move to be an increase.
However 81 per cent of those predicting an increase don’t see it happening until 2018, with 60 per cent not expecting it until April 2018 at the earliest.
While the experts stand united in predicting no change this month, rate changes have not been uncommon at this time of year according to Graham Cooke, insights manager at finder.com.au.
“In the last seven years, the Reserve Bank has cut rates five times in May. By this time of year, inflation and GDP data is released and the Bank has enough confidence to make a move,” Mr Cooke said.
“However, economists are universal in expecting no movement tomorrow.”
While the recently released inflation figures are moving into the RBA's target range they are still on the low side according to Michael Yardney from Metropole Property Strategists.
“Until job numbers improve it would be safe to assume the RBA won’t be hiking interest rates to slow the property markets down,” Mr Yardney said.
“On the other hand they can't afford to drop rates and fuel our property markets.”
Laing+Simmons managing director Leanne Pilkington also believes there are insufficient drivers to force the Reserve Bank to adjust rates at this time.
“While recent inflation figures appear to suggest the economy is moving in the right direction, concerns around demand for employment remain, and the forthcoming Federal budget is yet to go under analysts' microscopes,” Ms Pilkington said.
“Against this background, we believe the prudent course is for the Reserve Bank to hold.”
Meanwhile Monash University Associate Professor Mark Crosby believes Australia will wait to see what happens in the US before increasing the cash rate here.
“The RBA will wait another month or two to evaluate global developments and assess the probability of a new US rate rise before considering raising,” Mr Crosby said.