RBA delivers final cash rate call for 2024

This decision to maintain the cash rate months was widely expected by forecasters and economists nationwide, with all 40 experts in Finder’s ‘RBA Cash Rate Survey’ accurately predicting the outcome.

In the survey responses, associate professor at UNSW’s school of economics, Evgenia Detcher, noted that “stable unemployment”, low GDP growth with high government spending” alongside “weak private consumption and investment, and declining inflation” has kept core measures above target and created a “complex mix for the RBA”.

Detcher further commented that stable unemployment and inflation are “still above the target”, leading her to project that a cash rate cut this year is “highly unlikely”.

Associate professor in economics at the University of Tasmania, Mala Raghavan, said that while the September quarter inflation rate of 2.8 per cent and October monthly CPI rise to approximately 2.1 per cent both “align within the RBA’s target range”, she said the bank is “likely committed to maintaining its cash rate by choosing a wait-and-see approach”.

“This cautious stance allows the RBA to monitor global economic developments and understand how external factors may influence the Australian economy moving forward,” Raghavan said.

While economist at Corinna Economic Advisory Pty Ltd, Saul Eslake, said he was “still holding out for an initial cut in February”, he added that this outlook has been swayed by recent developments.

“My confidence in that view has been diminished by the RBA Board’s statement that it will require ‘more than one good quarterly inflation number’ to give it the confidence required that inflation is ‘sustainably’ heading back to the target range in order to take that first step,” Eslake said.

Professor at Macquarie University Business School, Geoffrey Kingston, commented that “May still looks like the most likely month of the first rate cut”, but noted that the decision “could be put back to July or later in the absence of decent falls in trimmed-mean quarterly inflation”.

LJ Hooker Group head of research, Matthew Tiller, shared his belief that the currently above target underlying inflation figures make “any reduction unlikely until May”.

“The next economic data is released at the end of January, and even if they were positive numbers, it doesn’t mean that the RBA will cut straight away as it will want to see a period of subdued inflation, and that pushes out any rate cut,” Tiller said.

As a result of these conditions, Tiller highlighted that “new listings have fallen as potential sellers wait and see when the RBA will take action in the New Year”.

“The market lost momentum earlier in spring than it would normally, we saw listings rise quite sharply and have dropped off faster than expected. Some vendors are holding off until the rate cut because they think this will bring more buyers to market,” Tiller said.

“But there are still buyers out there, transactions are happening, people are attending open homes, but there is more choice, so people are taking time to make a decision,” he added.

Tiller said that investor activity has gained momentum in the remaining weeks of the year, especially in “high growth regions like South Australia, Western Australia, and southeast Queensland” due to their affordability.

Through this activity, Tiller highlighted that “strong growth in rents is helping to cover the costs of the investment, while we are seeing attractive yields in affordable areas where rental listings are tight and there is a high demand for housing”.