The Reserve Bank has today released the outcome of its monthly board meeting, the first for 2019.
Continuing the trend over the past two years, the RBA today held the official cash rate at its record low of 1.5 per cent.
Top economists around Australia were unanimous in seeing a hold coming. However, from next month, there is a possibility of an interest rate cut, which My Housing Market’s Dr Andrew Wilson agreed with, as he said recent RBA statements indicate a hold but saw potential for a cut on the horizon.
This would be particularly likely if GDP data released on 6 March is disappointing, he said.
However, not all experts were in agreement about a looming interest rate cut, with AMP’s Shane Oliver saying a cut would require worse economic conditions.
“While economic data has generally been soft since the last board meeting in December, it’s unlikely to have been weak enough yet to prompt the RBA to cut rates, particularly given that its bias has still been to raise rates,” Mr Oliver said.
John Kolenda, managing director of Finsure and 1300HomeLoan, which last rate decision claimed holds could continue for an entire decade, said that a cut was unlikely during the upcoming federal election, which would not be until after May at the earliest.
“I don’t think they would cut rates during an election campaign,” he said.
“If it does happen it would most likely be in the third quarter, unless there is a material change in the overall economy.”
Investors looking to navigate the potential of a rate cut should be very pleased, according to Mr Kolenda.
“Mortgage holders will benefit from the RBA being proactive and trying to stimulate a deteriorating economy and improving consumer confidence,” he said to Smart Property Investment.
Tim Lawless, head of research at CoreLogic, said a potential rate cut could be on its way if smaller lenders keep rising their rates, as they have done in the last few weeks.
“The weeks preceding the RBA meeting saw several smaller lenders pushing mortgage rates higher in response to persistently high funding costs,” Mr Lawless said.
“If we see mortgage rates rising more broadly, we might see the RBA become more willing to consider a rate cut in an effort to offset higher funding costs and support heavily indebted household balance sheets.”