Interest rate change unlikely this mortgage season: finder.com.au

Experts predict the Reserve Bank will leave the current cash rate on hold at 2% ahead of its upcoming monthly board meeting today.

Of the 32 respondents to finder.com.au the latest Reserve Bank Survey, 31 economists and financial experts expect the cash rate to remain on hold, while just one respondent believes it will fall. 

Shane Oliver from AMP Capital said not much has changed since the last meeting and the Statement of Monetary Policy when the Reserve Bank seemed reasonably comfortable with current monetary settings.

"While on balance I think the Reserve Bank will need to cut interest rates again, I also think it’s a very close call as there is evidence that the economy is rebalancing and of course rates are already very low,” he said.

Bill Evans from Westpac said it is reasonable that a key explanation for markets pricing in around a 60% probability of a rate cut by November is the expectation that the Bank would continue to openly discuss the possibility of rate cuts.

"The Bank remains confident that inflation will remain consistent with the target over the next one or two years and also notes that the economy is likely to be operating with a degree of spare capacity for some time yet... there is nothing in this statement that would motivate us to move away from our call that rates will remain on hold in 2015 and through the course of 2016,” he said.

Dr Andrew Wilson from the Domain Group said the Reserve Bank is continuing with their ‘wait and see’ approach - but weakening data may be changing that bias. Paul Bloxham from HSBC believes the labour market improving is one of the reasons we anticipate the Reserve Bank will hold the cash rate at the September meeting.

Grant Harrod from LJ Hooker said the Reserve Bank has indicated that it is now comfortable with where the Australian dollar sits and thinks the unemployment rate has now peaked. Combined with the implementation of lending restrictions to property investors from the banks we expect the Reserve Bank to continue their ‘wait and see’ approach and maintain the cash rate at its current level.

Angus Raine from Raine & Horne said the latest Australian economic data proved to be a mixed bag with consumer confidence up and business confidence down.

"Property continues to be the flavour of the month in Sydney and Melbourne but the Reserve Bank in its latest minutes has noted that trends are more varied in other capital cities. These factors will prompt another hold decision,” he said.

Janu Chan from St.George Bank believes the Reserve Bank is a little bit more comfortable with recent developments, including a stronger-than-expected labour market, the weaker Australian dollar and improved business confidence and conditions.

"The rate cut door however, hasn't closed completely as there remains a risk that the economy will not pick up as the Reserve Bank expects," she said

"However, the tentative signs of improvement in the domestic economy are enough to leave the Reserve Bank in wait and see mode for a while longer.”

To track the current cash rate, click here.