BENGALURU, Sept 20 (Askume) – Australia’s central bank will keep its key policy interest rate unchanged for the rest of the year amid rising price pressures, economists polled by Askume said on Tuesday, with most expecting a reduction early in the year and the first cut expected next year as a result of achieving higher growth.
Inflation slowed to 3.5% in July but remains above the Reserve Bank of Australia’s 2%-3% target range. With the job market strong, policymakers have little or no room to cut interest rates next week.
The RBA is likely to lag behind other major central banks that have already begun cutting interest rates, including the Bank of New Zealand , the Bank of England , the Bank of Canada and the Federal Reserve , which cut interest rates by 50 basis points. The rupee on Wednesday.
The survey of all 45 economists is expected between September 12 and 19The Reserve Bank of Australia will keep the official cash rate (AUCBIR=ECI) steady at 4.35% at the end of its two-day meeting on Tuesday .
An overwhelming majority of 40 out of 44 expect rates to remain unchanged until the end of the year, while interest rate futures assess the probability of a cut by then at more than 50%.
“There is no prospect that the Reserve Bank of Australia will ease policy at this meeting,” said Robert Carnell, ING’s head of Asia-Pacific research.
He said, “The risk is slightly to the upside: the Reserve Bank of Australia has never cut interest rates enough to slow the economy and get inflation under control, and I think that’s a question that needs to be answered.”
Among the major local banks, ANZ, NAB and Westpac expect interest rates to remain unchanged this year, while the Commonwealth Bank expects a rate cut before the end of the year.
The Fed contacted major domestic banks after announcing its interest rate decision on Wednesday, but their views have not changed.
ANZ Bank senior economist Catherine Birch said: “We do not believe that the Fed’s decision to cut interest rates by 50 basis points will directly affect the Reserve Bank of Australia’s decision.”
“We expect the Reserve Bank of Australia to maintain hawkish language from its August meeting.”
The RBA is expected to begin an easing cycle next year, cutting interest rates by 25 basis points in the first, second and third quarters, before taking the cash rate to 3.60% in the last quarter of 2025.
(Additional reporting from Askume Global Economic Survey)
