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Interest rates are set to remain on hold when the Reserve Bank of Australia finishes its second meeting of the year later today.
The central bank will announce its decision at 2.30 pm, with financial experts and economists widely forecasting the cash rate will remain at the 12-year high of 4.35 per cent.
Falling inflation has bolstered hopes the Reserve Bank will soon be able to reduce interest rates, providing some much-needed relief for mortgage holders.
But central bankers are concerned about stubborn inflation in the United States. A report on American consumer prices last week showed inflation remains stubborn, ticking up to 3.2 per cent in February from 3.1 per cent in January.
Economists remain split on when the Reserve Bank will starting cutting interest rates, with many forecasting it won’t be until the second half of this year.
In this week’s Finder RBA Cash Rate Survey, a panel of 41 experts said they didn’t expect any cut until at least September.
One-in-four of them were even gloomier, predicting a reduction would not come until next year.
Data released last month showed Australia had its lowest annual inflation since November 2021 and a continued deceleration in the pace of the cost of living.
Australia’s monthly Consumer Price Index (CPI) indicator rose 3.4 per cent in the 12 months to January, according to figures from the Australian Bureau of Statistics.
The next Reserve Bank meeting will be held in May.
Meanwhile, there is a possibility the central banks of other major industrialised countries may cut interest rates before Australia.
The Bank of England is under pressure to slash its rate of 5.25 per cent – a 16-year high, when it meets on Thursday.
