市場分析

RBA Sticks to Current Rates, Rate Cut Forecast Delayed to Q2 2025: Poll

Amos Simanungkalit · 06 Dec 202431.5K 閱讀

Image Credit: Reuters

Australia's central bank is set to maintain interest rates on Tuesday, as a strong labor market continues to keep inflation high. Economists surveyed by Reuters have pushed their forecast for the first rate cut to the second quarter of next year.

The Reserve Bank of Australia (RBA) is the only central bank among its peers that has yet to start reducing borrowing costs, mainly because it raised rates by a more modest 425 basis points from May 2022 to November 2023. Inflation, which the RBA targets between 2%-3%, decreased to 2.8% last quarter from a peak of 7.8% in late 2022 due to pandemic-related disruptions in global supply chains.

However, core inflation remains persistently high at 3.5%, and with unemployment near historic lows, the RBA is likely to keep interest rates elevated for a longer period. A Reuters poll conducted from November 28 to December 5 showed that all 44 economists surveyed expect the RBA to keep its official cash rate at 4.35% at the conclusion of its two-day policy meeting on December 10.

Over 60% of the economists, 25 out of 40, predict the RBA will first cut rates by 25 basis points in the second quarter of 2025, compared to the majority forecasting a cut in the first quarter in the November poll. Major banks like ANZ, NAB, and Westpac align with this outlook, while CBA expects the first cut in Q1 2025.

Luci Ellis, chief economist at Westpac, explained that the labor market's resilience since the November RBA meeting led her to adjust her forecast for the first rate cut from February to May. Financial markets are currently pricing in a greater than 70% chance of a rate cut by April.

Despite recent signs of economic weakening, with growth at its slowest annual pace since the pandemic, economists expect the RBA to maintain a cautious approach. Taylor Nugent, senior economist at NAB, noted that gradual economic progress will likely lead to softening in the labor market, but it will take time before the RBA feels comfortable reducing rates.

Meanwhile, falling mortgage rates are expected to help Australian home prices rise steadily next year. A separate Reuters poll showed that the Australian dollar is likely to appreciate by nearly 1.5% over the next year, from its current level of $0.644, as the RBA is expected to cut rates less aggressively than the U.S. Federal Reserve.