Despite the majority of experts predicting a stand-still, the RBA has reduced the official cash rate to 1.75 per cent – the first move since May 2015.
An overwhelming 97 per cent of leading economists and commentators surveyed by comparison website finder.com.au expected the board to leave the cash rate unchanged at 2.0 per cent.
QUT adjunct professor Noel Whittaker was the only expert to predict further easing, based on the recent strength of the Australian dollar.
Griffith University associate professor Mark Brimble believed the RBA would be reluctant to cut the official cash rate “due to fears around property and the general market volatility”, though he admitted the move is justified.
“My view is that the economy does need support, with China lowering expectations, Europe requiring and receiving further support, negative rates in Japan and the US pace of recovering remaining muted,” he said.
However, many experts surveyed said there was no prerequisite for the RBA to drop the official cash rate from 2.0 per cent.
“There has been no significant deterioration in the Australian economy since last month’s RBA meeting,” LJ Hooker CEO Grant Harrod said.
Mortgage Choice spokesperson Jessica Darnbrough agreed: “In recent weeks, unemployment has dropped, property prices have climbed slightly higher and new consumer sentiment data showed confidence continues to hover around average levels.
“All of these things combined should provide the RBA with no incentive to change the cash rate setting.”