As a nation Australians have been wondering how long will it be until interest rates are lowered. Financial pressures from higher interest rates, a move by the reserve bank to bring inflation back into a target range, has weighed heavily on consumers and businesses.
The current 18th month monetary cycle has taken the cash rates from a record low of 1% to 4.35% currently. At the recent March meeting interest rates were left on hold at the same level.
Could they go higher? Most economists and even the Reserve Bank say this is possible depending on economic data and this cannot be ruled out as an option.
In a recent article by Maja Garaca Djurdjevic, “Economists divided: When will the RBA cut interest rates?”(1) looked at the expectations of Australia’s top Economists with the most optimistic predicting June 2024 and the most pessimistic Early 2025.
Their predictions are summarised below:
Gareth Aird | CBA | September 2024 |
Adam Boynton | ANZ | November 2024 |
Luci Ellis | Westpac | September 2024 |
Shane Oliver | AMP | June 2024 |
Paul Bloxham | HSBC | Early 2025 |
Harry Murphy Cruise | Moody's Analytics | September 2024 |
Stephen Miller | GSFM | Second half of 2024 |
According to the article, CBA economist Gareth Aird was bold enough to predict a 0.75% decrease in rates in 2024 and an additional 0.75% decrease in the first quarter of 2025.
A reduction in rates reduces interest repayments on debt, which is good for homeowners with a mortgage and increases the amount of cash available for households and businesses to spend on goods and services. It can also have the effect of encouraging borrowing for investment.
(1) For more information or to read the full article by Maja Garaca Djurdjevic visit: Investor Daily Article: Economists divided: When will the RBA cut interest rates?