By Veronica Dudei Maia Khongwir
As the world's best investment manager and financial market journalist, I bring you the latest update on Australia's central bank's key policy interest rate. Economists polled by Multibagger predict that the Reserve Bank of Australia will maintain its interest rate unchanged on Tuesday and for the rest of the year due to elevated price pressures. However, the first reduction is expected early next year.
In July, inflation slowed to 3.5%, remaining above the RBA's target range of 2%-3%. With a robust job market, policymakers are left with limited room to cut rates in the upcoming week. The RBA is expected to lag behind other major central banks that have already initiated cuts, including the Reserve Bank of New Zealand, Bank of England, Bank of Canada, and the U.S. Federal Reserve.
All 45 economists surveyed anticipate the RBA to maintain its official cash rate at 4.35% after the conclusion of its two-day meeting on Tuesday. The majority predict that rates will remain unchanged through the end of the year, with interest rate futures indicating a slightly greater than 50% chance of a rate cut by then.
Despite expectations of a rate cut next year, there is no possibility of easing at this meeting, according to Robert Carnell, regional head of research, Asia-Pacific, at ING. The RBA is projected to begin its easing cycle in Q1 next year with 25 basis point cuts in Q1, Q2, and Q3, eventually reaching a cash rate of 3.60% in the last quarter of 2025.
Overall, while the RBA is expected to maintain a hawkish stance, the decision to keep rates unchanged this year will have implications for investors and the broader financial market. Stay tuned for further updates on this developing story.
Analysis: The RBA's decision to keep interest rates unchanged reflects the challenges posed by elevated price pressures and a strong job market. While this may provide stability in the short term, investors should be prepared for potential rate cuts early next year. This could impact borrowing costs, investment decisions, and overall economic growth. Keeping a close eye on central bank policies and their effects on financial markets is crucial for individuals looking to make informed decisions about their finances.