RBA likely to maintain current rates in September, potential cut anticipated in early 2025: Reuters poll
Australia’s Central bank is expected to maintain its key policy interest rate unchanged on Tuesday and for the remainder of the year, as indicated by economists surveyed by Reuters. Most analysts anticipate the first rate cut to occur early next year, given the persistent price pressures despite a slight slowdown in Inflation to 3.5% in July, which still exceeds the Reserve Bank of Australia’s target range of 2%-3%. With a robust job market, policymakers are unlikely to have the space to lower rates in the upcoming meeting.
Unlike other major central banks such as the Reserve Bank of New Zealand, Bank of England, Bank of Canada, and the U.S. Federal Reserve that have already initiated rate cuts, the RBA is expected to lag behind. All 45 economists polled from September 12-19 foresee the RBA maintaining its official cash rate at 4.35% during its upcoming meeting. The majority of analysts (40 out of 44) predict that rates will remain stable until the end of the year, although interest rate futures reflect a greater than 50% chance of a rate reduction by then.
According to Robert Carnell, regional head of research at ING, there is no likelihood of the RBA easing rates at this meeting as the Central bank has not tightened rates significantly enough to curb Inflation. Major local banks such as ANZ, NAB, and Westpac anticipate no changes in rates this year, while CBA forecasts a single cut before the year concludes. Despite the U.S. Federal Reserve’s recent decision to reduce rates by 50 basis points, Australian banks do not expect it to influence the RBA’s decision significantly.
Looking ahead, the RBA is projected to commence its easing cycle next year with 25 basis point cuts in the first three quarters, followed by a pause to bring the cash rate to 3.60% in the last quarter of 2025.
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Emma Collins, graduated in Financial Economics from the University of Chicago in the USA in 2016. She has since worked at an asset management firm in New York, where she specializes in investment strategies and portfolio management. Emma has a keen interest in financial analysis and has published several articles in renowned financial journals. Her work focuses on providing actionable insights to investors, and she is known for her forward-thinking approach to managing financial portfolios.