RBA held but November rate cut expected: Finder

Despite mounting speculation about the possibility of another cut, the RBA announced that it will hold the cash rate at 0.25% at its October meeting.

In this month's Finder RBA Cash Rate Survey™, 40 experts and economists weighed in on future cash rate moves and other issues related to the state of the Australian economy.

The decision coincided with the unveiling of the federal budget for 2020-2021, in which the government has detailed how it intends to steer the nation out of its first recession in 30 years.

Despite the October rate hold, 22% of experts (9/40) predict that a cut could still be on the cards in November.

Graham Cooke, insights manager at Finder, said that a standalone cut of 15 basis points is unlikely to have much of an impact on Australia’s economy.

“The cash rate has fallen by 125 basis points over the last year and a half– 15 more is unlikely to make much of a difference beyond making the RBA feel like they are at least doing something.

“The decision to hold the rate for now also suggests that the RBA wants to assess the budget in detail before making a decision about further moves,” he said.

Susan Mitchell, CEO at Mortgage Choice, agrees, stating that while the RBA has hinted at a rate cut, it would be unlikely to do so today.

“Although a case could be made for a cut this month, I think the RBA will keep the cash rate unchanged at its October monetary policy meeting.

“Board members will wait to digest the Federal Budget announcement before making their next move," Mitchell said.