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Three-quarters of economists predict next cash rate cut

RBA

Ahead of the Reserve Bank’s monthly meeting tomorrow, a survey has revealed that 75 per cent of the nation’s top economists predict a looming rate cut.

Fifteen of the 17 economists surveyed by comparison site finder.com.au expect at least one rate cut for 2019.

All economists surveyed believe that the cash rate will remain on hold tomorrow.

“With the housing market continuing to tumble, and other global and international economic factors looking grim, experts seem to be sure we’re looking at at least one cut in 2019, if not two,” said Graham Cooke, insights manager at Finder.

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A rate cut ease is overdue, according to chief economist at My Housing Market Dr Andrew Wilson.

“Although recent wage data was reasonable — not good, not bad — the RBA has conditioned the market to now expect a long-needed cut,” he said.

“This cut will attempt to revive consumption, which is now likely to also be impacted by continuing weaker housing markets.”

Last month, BetaShares chief economist David Bassanese said that Australia faces a “delicate balancing act” in navigating itself out of the housing and credit adjustment.

Mr Bassanese believes that the RBA will cut rates by the end of the year, with a likely move to a 1 per cent cash rate by February 2020.

“My view is that we need to see a decent lift in the unemployment rate to at least 5.75 per cent to justify the longer-run risk to financial stability from reducing interest rates even further below their long-run neutral rate,” he said.

Three-quarters of economists predict next cash rate cut
RBA
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