ANZ predicts RBA is close to “extended pause” on interest rate hikes

ANZ has made a bold prediction ahead of the Reserve Bank’s next move on the official cash rate as millions of Aussie homeowners hold their breath.

A deep recession in Australia “seems unlikely” and the Reserve Bank is close to an “extended pause” on interest rate hikes the ANZ bank has predicted.

As homeowners brace for the RBA’s verdict on interest rates today, the ANZ has suggested the pain could soon be paused.

While Australia is already at risk of a per capita recession which is defined as two quarters of negative growth, the bank is forecasting relief is in sight for homeowners with a mortgage from successive rate rises.

“Beyond that, there are scenarios in either direction for interest rates in 2024,’’ the ANZ’s chief economist Richard Yetsenga said.

“The ANZ-Indeed Australian Job Ads series suggests the unemployment rate is likely to rise above 4%.

“None of these, however, suggest a recession is imminent.

“What they do suggest is that the Reserve Bank of Australia is close to an extended pause in its hiking cycle.”

The Reserve Bank is close to an “extended pause” on interest rate hikes, according to ANZ. Picture: NCA NewsWire/Bianca De Marchi

The March GDP per capita figures fell by 0.3 per cent on a quarterly basis and the next figures will emerge in early September.

After twelve near-consecutive rate hikes, the ANZ suggests the RBA can afford to take some time to assess the full impact of the tightening delivered so far.

“The economic slowdown in Australia is clear,’’ Mr Yetsenga said.

“Companies, consumer spending and office property are all showing strain.

“The slowdown should broaden and deepen this year and more sectors feature in the headlines.

“(But) there are a range of reasons to expect even in the unlikely event Australia has a recession, it is likely to be relatively brief and mild

“It’s difficult to have a deep recession when the population is growing at 2%.

Million of Aussie homeowners are anxiously awaiting the announcement. Picture: NCA NewsWire / Glenn Campbell

Treasurer Jim Chalmers predicts that despite the slowing economy a recession is not on the cards.

“It’s certainly true Australians are under the pump,’’ he said.

“We understand that. Part of the reason for that is they’ve had these interest rate increases which began before the election last year and continued after.

“It is right, the Reserve Bank will take its decision independently. The government takes responsibility for what we can do against inflation. It is inflation that has been forcing up interest rates.”

“We’re already seeing our economy slowing. And that has been as we have anticipated.”

Originally published as ANZ predicts RBA is close to “extended pause” on interest rate hikes