Analysts are not expecting any cash rate hikes from The Reserve Bank of Australia (RBA) until September 2019, according to a Reuters poll released on Friday, June 29, as inflation stays below the bank’s 2-3 % target band and a U.S.-driven international trade war looms.
Of the 33 analysts surveyed, a majority of them (20) believed that there will be no rate changes coming from the RBA by June 2019. One respondent predicted a drop, while the remaining 12 said that the central bank would have at least one hike within the period.
“A rise in the cash rate to 1.75% is not seen before the September quarter of 2019, according to a median of 30 analysts, compared with last month’s poll, which predicted a hike by June,” Reuters reported.
Economists, on the other hand, were more conservative with their forecasts. Only one economist responded that there could be a cut, while nearly all the rest – a staggering 30 of the 32 polled – chose to wait for the policy meeting on July 3 before making any comments.
“Falling home prices in Sydney and Melbourne, tightening bank lending standards and the threat to global growth from a U.S.-driven trade war all argue against a hike,” AMP Capital Chief Economist Shane Oliver told Reuters.
“It makes sense for the RBA to remain on hold. We remain of the view that a rate hike is unlikely before 2020 at the earliest and can’t rule out the next move being a cut.”
Apart from Oliver, eight other respondents including Westpac Banking Corp. and Macquarie Group anticipated that the cash rates would stick to its status quo until the end of next year.
Looking at recent developments in the country, including the slowdown in market and wage growth, it can be difficult to foresee the central bank’s next move. Its positive outlook on the economy, however, strongly suggests there would be no rollback in cash rates anytime soon, especially after the end of the mining boom and the growth in business investment and exports.