Ahead of the March interest rates verdict by the Reserve Bank, a group of economists and property pundits have suggested that the central bank will be forced to cut rates twice this year.
While RBA governor Philip Lowe recently moved away from suggesting that the next move in official rates will be up — and that it is now a 50-50 chance for either a cut or an increase — three-quarters of the 31 commentators on the finder.com.au interest rates panel believe that the next move will be down.
Most believe that at least one cut is likely this year alone, with two cuts being the most common forecast.
That would take the official interest rate from 1.5 per cent — already a historic low — to just 1 per cent.
“With the housing market continuing to tumble, and other global and international economic factors looking grim, experts seem to be sure we’re looking at at least one cut in 2019, if not two,” said Graham Cooke, Finder’s insights manager.
However, all 31 economists and experts believe that the RBA will again hold fire on any change this month.
Dr Andrew Wilson (pictured), formerly chief economist at Domain who now holds the same position at My Housing Market, suggested that not only is another cut in interest rates likely, but also overdue.
“Although recent wage data was reasonable — not good, not bad — the RBA has conditioned the market to now expect a long-needed cut,” he said.
“This cut will attempt to revive consumption, which is now likely to also be impacted by continuing weaker housing markets.”
Not everyone on the panel was so hawkish, however, with many, such as Shane Oliver of AMP Capital, taking the view that “things aren’t yet weak enough to push the RBA to cut but, they aren’t strong enough to push it to hike either”.
Trent Wiltshire of Domain concurred: “The RBA has stated the outlook for the cash rate is more balanced, rather than the hiking bias seen throughout 2018. But the RBA is still keen to avoid cutting rates.”
Leanne Pilkington, managing director at real estate network Laing+Simmons, suggested that the housing market is currently facing “a stand-off”, with plenty of interest from prospective buyers but “reduced accessibility to finance” forcing them to sit on the sidelines.
“While this issue runs deeper than merely the cost of finance, a hold pattern remains the prudent course,” she said.
Adam Zuchetti is the editor of My Business, and has steered the publication’s editorial direction since early 2016.
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