‘Tangible relief’: Interest rate cut imminent say 88pc of experts

Struggling Aussie homeowners and buyers are set to see ‘tangible relief’ with 88pc of experts backing RBA to slash interest rates.

A massive 88 per cent of experts believe the RBA will cut interest rates come Tuesday.

Struggling Aussie homeowners and buyers are set to see ‘tangible relief’ come Tuesday with 88pc of experts backing RBA to slash, with a huge call over what numbers will be by Christmas.

Finder’s RBA Survey involving 41 experts and economists saw 36 of them now believe a rate cut is certain on May 20 – 34 of whom predict it will be a 25 basis point drop and two taking the same line as the National Australia Bank predicting a large 50bp fall.

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Finder head of consumer research Graham Cooke said “with a February cut and now one expected in May, homeowners might finally start to feel tangible relief”.

“Our experts are predicting several more cuts later this year, and we could be looking at a cash rate of close to 3 per cent by Christmas.”

More than half of those surveyed (56pc) expect two more cuts – in July and August – mostly because of inflation returning to RBA’s 2-3pc target, though some also flagged weak growth and global uncertainty.

Oxford Economics Australia head of macroeconomic forecasting Sean Langcake said “with upside inflation risks dissipating, the RBA can afford to lend the economy some more support”.

Finder's latest RBA Survey has 56pc also picking July and August for cuts, 34pc September and November, and the numbers dwindling after that.

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Bendigo Bank head of economic and market research David Robertson would like to see a larger cut than 25bp come Tuesday.

“I expect the RBA to cut rates by another 25 basis points on May 20, with some risk of a larger cut (35bp would be ideal) but in the absence of a sudden sharper downturn in global conditions a 50bp cut appears unlikely.”

But five of the 41 experts continue to hold out, expecting the Reserve Bank board to do so as well (12pc of those surveyed), with one of the reasons cited being wages growth.

Ord Minnett head of institutional research and asset allocation Malcolm Wood explains: “the labour market remains tight, driving above trend wages growth. With no productivity growth, this puts unit labour costs above the RBA’s inflation target”.

Finder head of consumer research Graham Cooke says we could be looking at a cash rate of close to 3pc by Christmas.

US President Donald Trump’s double backflip on tariffs was also a factor, according to Monash University director of the bachelor of international business program Mark Crosby: “US policy randomness is settling into a pattern of reversals which make US and global slowdowns less likely”.

Regardless of what direction it takes, Mr Cooke said homeowners who maintained the status quo on their repayment amounts they will be better off later.

“With any rate cut, if you can continue making the same payment each month, you will knock more off the principal and pay less interest over the long run”.

Originally published as ‘Tangible relief’: Interest rate cut imminent say 88pc of experts