Cash rate cuts predicted by August: Finder

Finder’s latest RBA Cash Rate Survey has found that one in three economists surveyed believe that a cash rate cut could come by at least August this year, while 89 per cent of respondents have predicted a further hold in the cash rate at 4.35 per cent.

However, almost half of respondents (40 per cent) have predicted that the Reserve Bank of Australia (RBA) will not begin cutting rates until December this year or later.

Head of consumer research at Finder, Graham Cooke, said that many Australians are in “urgent need of reprieve”.

“Home owners are still reeling from 13 rate hikes in the last two years. Our data shows a staggering 40 per cent struggled to pay their mortgage in December,” Mr Cooke said.

“Even though inflation is falling, I expect the RBA will hold the cash rate for most, if not all of 2024.”

This came as major bank NAB announced its updated cash rate prediction for February, now forecasting a hold instead of a further interest rate hike of 0.25 bps, aligning with predictions of the rest of the big four.

NAB and ANZ have predicted one rate cut to occur during 4Q24, while Westpac has predicted a total of two this year (first being in August) and the Commonwealth Bank of Australia (CBA) having pencilled in three rate cuts from September 2024.

Furthermore, AMP chief economist Dr Shane Oliver stated that AMP expects the RBA to begin lowering interest rates even earlier, with the first one expected in June for a total of four interest rate cuts over 2024 in anticipation of the Federal Reserve and the European Central Bank’s rate cuts around April this year.

Additionally, Finder’s Cost of Living Pressure Gauge revealed that the cost-of-living pressure experienced by Australian households reached the “extreme range” at 79 per cent in December 2023.

According to Finder, respondents reported $3,000 lower savings balances in December compared to November 2023, with 78 per cent feeling “extremely or somewhat stressed” about finances.

“While the gauge remains in the extreme range, it’s likely that this will be where the cost-of-living pressure peaks,” Mr Cooke said.

“We expect to see some relief on the horizon, and with a little luck the pressure will reduce slowly over many months.”

[RELATED: February cash rate hold called by big 4]