Mortgage holders are set to get another reprieve this week with interest rates widely expected to remain on hold, though uncertainty over when the first cut could come remains.
Comparison website Finder's panel of 41 economists and property experts all predict that the Reserve Bank of Australia's (RBA) board will leave the cash rate target at 4.35 per cent when it meets on Tuesday.
That view is also shared by RSM Australia economist Devika Shivadekar.
"Recent data showing a softer inflation trend and a cooling labour market will likely see the RBA maintain a stance of cautious non-action to manage inflation expectations effectively," Shivadekar said in a statement on Saturday.
The Reserve Bank of Australia board will make an interest rates decision on Tuesday. The board now meets eight times a year, rather than monthly. Source: AAP, AP / Mark Baker
The most recent monthly inflation data showed consumer prices rose 3.4 per cent over the year to January — steady on the December figure, but below the slight uptick some economists had expected.
The closely-watched, comprehensive quarterly figure will be released in late April.
Interest rate predictions
The RBA board now makes cash rate decisions less frequently, meeting eight times a year rather than monthly following reforms.
The big four banks — the Commonwealth Bank, ANZ, NAB, and Westpac — all currently forecast that interest rates are at their peak.
The Commonwealth Bank and Westpac predict the first cut could come late in the third quarter of this year, while NAB and ANZ believe it might happen in the fourth quarter.
However some, like comparison website Mozo's personal finance expert Rachel Wastell, believe it could happen sooner.
Wastell believes the RBA will leave rates on hold on Tuesday, but says anticipated outcomes from the board's May and June meetings are "more up in the air".
"The next quarterly CPI (consumer price index) data is due at the end of April ... so if inflation comes down into that 2-3 per cent range, we could potentially see the RBA cut as soon as the middle of this year," Wastell said in a statement.
"Fixed-rate cuts across the board reflect the market consensus that we've reached the peak of the rate hiking cycle."
Economic outlook 'highly uncertain'
Inflation came in at 4.1 per cent in the December quarter, the most recent quarterly data available. .
The RBA board believes inflation will return to its 2 to 3 per cent target band next year, and to the midpoint in 2026, according to the minutes from its February meeting.
But its statement on monetary policy contained an assumption that th. However, RBA governor Michele Bullock stressed that this was an assumption and not anything beyond that.
It has also warned the economic outlook remains "highly uncertain" and has not ruled out further rate hikes.
"The board expects that it will be some time yet before inflation is sustainably in the target range," its February statement on monetary policy read.
