16 experts predict “no change” from RBA tomorrow
A survey of 16 economists and experts undertaken by finder.com.au has found that the Reserve Bank of Australia is unlikely to change their rates in their June meeting tomorrow.
Of course, the question remains as to when the rate will next be increased – with the majority of experts believing we have reached the bottom of the rate cycle.
According to those surveyed, nine forecast an increase next year. This included AMP, ANZ, Bank of Sydney, ING Direct, RAMS, UBS, Heritage Bank, Moody’s Analystics and ME Bank.
Meanwhile, five respondents, from Commonwealth Bank, Commsec, Urbis, HSBC and St George Bank, pointed to a cash rate increase this year.
Of the experts, 10 believed that reactions to the federal budget cuts will delay any change. Nine noted that more stability needs to be seen in the economy before any changes.
Results from Finder survey:
Economist/expert, organisation | Snap shot of comments |
Shane Oliver, AMP | “...Nothing's really happened. The Reserve Bank has cut interest rates to these record lows, and that has had an impact on the economy...” |
Warren Hogan, ANZ | “...There’s no inflation pressure on the economy just yet so they can keep the rates low, and there's no need to cut them...” |
John Symond, Aussie | "...We don't think there will be a change to rates, as the economy continues to send out mixed signals..." |
Steven Pambris, Bank of Sydney | “...The current record low interest rates will have to continue for some time...” |
Michael Blythe, CBA | “...What will be interesting to see is how the budget's reception will impact household consumption...” |
Craig James, Commsec | “...There's been a lot of huffing and puffing about the budget, but really it's people's perception. There's no reason for the reserve Bank to be cutting rates...” |
Paul Williams, Heritage Bank | “...The rba will be keeping an eye on the trends in unemployment, developments in key offshore economies, inflation levels and rising tensions in south east asia and europe...” |
Paul Bloxham, HSBC | “...The economy is showing signs of rebalancing but inflation is fairly contained at this stage...” |
Michael Witts, ING Direct | “...Although consumers appear to reacted adversely to the measures announced in the budget it is too early tell what the lasting impact will be...” |
John Caelli, ME Bank | “...Inflation is within the target zone so the RBA can afford to wait and see the recovery unfold…” |
Glenn Levine, Moody’s Analytics | “...The RBA will leave interest rates on hold, but this competing dynamic between a below-trend economy and a warming housing market will shape monetary policy in the next 12 months...” |
Jonathan Chancellor, Property Observer | “...Other than the post-budget consumer blues, there's little reason for the RBA board to do anything but issues their monthly minutes this June...” |
Nathan McMullen, RAMS | “...Monetary policy settings remain mildly expansionary relative to long run averages and are appropriate given the current outlook...” |
Hans Kunnen, St. George Bank | “...The economic recovery isn't deep enough for them to be raising money this soon...” |
Scott Haslem, UBS | “...It's pretty clear the RBA is expecting the economy to only slowly improve over the next couple of years...” |
Nicki Hutley, Urbis | “...Consumers opened their wallets a little wider in the first few months of the year and the housing cycle is in full swing...” |
Property Observer’s editor at large, Jonathan Chancellor, who took part in the survey, noted that the RBA will be interested that national house values have fallen in May, as they have in each of the past three May months.
“But May's fall is the first monthly fall in values since May 2013.
“Meanwhile construction is coming along nicely, with NSW taking the rightful crown from Victoria as the national's busiest new home market. That means, other than the post-budget consumer blues, there's little reason for the RBA board to do anything but issues their monthly minutes this June.”
Last week, Property Observer reported that the RBA's former governor Ian Macfarlane noted that there is no housing bubble, but that affordability is an issue. Part of the affordability issue, he said, is negative gearing's effect.
For more predictions of when the next rate increase will be, you can see a summary of economists' thoughts here.