Finder’s RBA Survey: Majority of experts predict another cash rate hike in May

The RBA will hike the cash rate to its highest level in two years this Tuesday, according to the majority of experts from a Finder poll.

In this month's Finder RBA Cash Rate Survey™, 36 experts and economists weighed in on future cash rate moves and other issues relating to the state of the economy.

Three-quarters of the panel (75%, 27/36) expect the RBA to raise the cash rate on Tuesday – the third hike in this new tightening cycle.

Richard Whitten, home loans expert at Finder, said another rate rise will be a bitter pill to swallow for households already reeling from rising costs.

"Another rate rise would take the cash rate back to its 2024 peak, but the economic environment is tougher now.

"Inflation has continued to rise in that time, meaning Australians are in an even worse position than they were two years ago.

"While default rates remain low, and the RBA likely believes borrowers can handle a slightly elevated rate, it's hard to imagine rates going much higher without something breaking," Whitten said.

Stella Huangfu from the University of Sydney said this week's CPI showed annual inflation at 4.6%, well above the RBA's 2-3% target.

"Underlying inflation also remains elevated, suggesting price pressures are not just a temporary fuel-price spike. This makes a rate increase next week more likely, as the RBA will want to keep inflation expectations anchored," Huangfu said.

Scott Kuru from Freedom Property Investors is also tipping a hike.

"Unfortunately, despite the weaker than expected March CPI data, inflation won't be coming down fast enough for the RBA board members in their ivory tower.

"Unfortunately, pushing the cash rate up to 4.35% will probably have devastating consequences for a lot of Aussies already facing a cost of living crisis and high oil prices," Kuru said.

Saul Eslake from Corinna Economic Advisory Pty Ltd is one of the 25% (9/36) anticipating a hold.

"Although headline inflation rose sharply in March, 'underlying' inflation was unchanged from February at 3.3%. Yes, that's still above the top end of the RBA's inflation target band – but no more than it was a month ago. And the increase in fuel prices has a similar impact on aggregate household finances to a further increase in interest rates.

"So if 'underlying' inflation hasn't risen further, the RBA doesn't need to raise rates again in May (since it's already raised them twice this year). It can afford to "wait and see" what happens to inflation expectations," Eslake said.

More than half of experts forecasting a hike in May (52%, 14/27) expect a follow-up hike to the cash rate as soon as August this year, with a further 26% (7/27) tipping a September move.

Experts divided on whether it's too late to fix your mortgage

Opinion is split on whether it is now too late for Australian homeowners to seek protection via a fixed rate mortgage.

Of those who weighed in* (41%, 9/22) say it's too late, while 41% (9/22) believe it's not too late to fix.

The remaining 18% (4/22) said they aren't sure.

Shane Oliver from AMP said now probably isn't the ideal time to fix.

"It's not the best time as fixed rates have already gone up, but it can still afford some protection if a borrower can't afford any further increase in variable rates," Oliver said.

Richard Whitten said fixing your interest rate is never about beating the banks.

"Banks are better at predicting rate movements than their customers. It's their business.

"Right now, the most competitive 1 and 2 year fixed rates are quite similar to the most competitive variable rates.

"It really depends on your goals. If you think interest rates are likely to rise further this year (and signs suggest they will) then fixing today means protecting yourself from future rate rises. It's about being able to budget more effectively for your repayments," Whitten said.

A rate hike will cost the average borrower an extra $2,657 a year (compared to the start of this year)

Aussies with the average home loan of $736,259 will have to fork out $2,657 more per year on their mortgage (compared to what they were paying before the RBA started hiking the cash rate this year) if the cash rate rises by 25 basis points in May.

*Experts are not required to answer every question in the survey.

Here's what our experts had to say about the cash rate:

David Robertson, Bendigo Bank (Hold): "I still expect another two RBA hikes in this tightening cycle and acknowledge that the market curve implies more than a 2 in 3 probability of a May hike, but I'd prefer to see a less aggressive approach especially with Consumer Confidence falling to a record low."

Adj Prof Noel Whittaker, QUT (Hold): "I think it is the only practical option. To me, it would be economic madness to raise rates in this time of uncertainty. And even though a recession is forecast, it's not happening yet. So they won't be dropping them."

James Morley, University of Sydney (Hold): "This meeting will be a close call. But the fact that underlying measures of inflation did not go up too much in the March report and developments in the Middle East, including UAE leaving OPEC, may well lead the RBA to hold at this meeting as a way of moderating the pace of rate increases given the conflicting tensions of a supply shock on inflation and the real side of the economy. Prior to the inflation report, I thought the RBA would increase, in part in anticipation of an expansionary federal budget. But I suspect they will hold, with a statement that this is a matter of pace in terms of increasing the cash rate given inflationary pressures and that, if inflation measures, including underlying, come in higher than expected in future reports, the oil price shock looks more persistent, and other considerations such as domestic demand pressures following the budget look inflationary, then they may well increase further in future meetings to ensure their forecast has inflation returning to target soon after the oil price shock has dissipated."

Evgenia Dechter, UNSW (Hold): "Inflation has lifted to 4.6%, with core at 3.3%, and, as expected, the main driver is higher oil prices. The oil shock and the Middle East conflict were already factored into the RBA's previous decision, so this time the RBA may prefer a wait and see approach as more data come in, especially with business and consumer confidence looking weak. That said, the steady unemployment rate gives the RBA room to hike again given the concerns that the fuel price shock will spill over into broader inflation."

Jeffrey Sheen, Macquarie University (Hold): "With core inflation stuck above the RBA's target band, the cash rate was lifted to 4.1% in March. Since then, higher energy prices from reduced Gulf supply have raised near-term inflation risks and lifted business inflation expectations (BOSS: 3.3% in February to 4.2% in April). But firms report little intention to raise their own prices, implying limited pass-through. The RBA is therefore likely to hold in early May, while warning it will respond if second-round effects emerge. Ongoing geopolitical uncertainty also skews risks towards weaker growth and perhaps a recession from mid‑2026, If realized, this would require easier monetary policy."

Saul Eslake, Corinna Economic Advisory Pty Ltd (Hold): Although headline inflation rose sharply in March, 'underlying' inflation was unchanged from February at 3.3%. Yes, that's still above the top end of the RBA's inflation target band - but no more than it was a month ago. And the increase in fuel prices has a similar impact on aggregate household finances to a further increase in interest rates. So if 'underlying' inflation hasn't risen further, the RBA doesn't need to raise rates again in May (since it's already raised them twice this year). It can afford to "wait and see" what happens to inflation expectations."

Stephen Miller, GSFM (Hold): "The close decision last time was 'more about timing than direction'. May 'pause' before contemplating the utility of further tightening."

Cameron Murray, Fresh Economic Thinking (Hold): "Honestly, it's a toss-up between hold and raise. They really want inflation under control."

Leanne Pilkington, Laing+Simmons (Hold): "While the latest inflation data translates to a good chance of another rate rise, it is clear that the major culprit is fuel. People are already experiencing pain relative to higher rates each time they fill up their car, so the RBA should think twice before adding to this pain, especially just before the Budget."

Dr Andrew Wilson, My Housing Market (Increase): "March inflation spike and continued uncertainty over near-term fuel costs should activate the Bank to raise rates back to where they were at the beginning of 2025."

Anthony Waldron, Mortgage Choice (Increase): "Governor Bullock has been clear that the RBA Board will take a data-informed approach to keeping inflation within its target range of 2-3%. Unfortunately for borrowers, the data is pointing to a hike. The ABS's CPI inflation data showed that inflation climbed over the March quarter, which I expect will force the Reserve Bank to deliver its third rate hike this year."

Matthew Greenwood-Nimmo, University of Melbourne (Increase): "I think the RBA will most likely raise the cash rate, although it's not a certainty. The case for a rate hike is that inflation is above target and is likely to move higher in the coming months as the economic impact of the Middle East conflict plays out in Australia and around the world. The RBA may also be concerned about the prospect of inflation expectations drifting further upwards, and may view a rate hike in May as an important signal of its commitment to managing inflation. The case for holding the cash rate constant is that most of the upside risk to inflation is coming from supply disruptions rather than domestic conditions. In addition, the effects of the previous rate hikes have not been fully felt yet (interest rate hikes work to cool the economy gradually, with a lag) and the economy is likely to soften in any case as households and firms respond to the impacts of the energy shock."

Tomasz Wozniak, University of Melbourne (Increase): Everybody thinks so! My forecasting system, with nearly 200 predictive models, provides an 82 per cent chance of RAISE! This probability is in line with those provided by Australian analytical departments and expresses the market expectations. The most recent readings of inflation above the target likewise suggest the same. Therefore, despite the predictive interval including the current cash rate value, I say it's a likely RAISE. However, the circumstances are complex, and the RBA's decision will have to balance them all, making its course of action highly uncertain. My forecasts are available at: https://forecasting-cash-rate.github.io/"

Mala Raghavan, University of Tasmania (Increase): "The March quarter CPI rose to 4.6%, leaving policymakers and households uneasy and frustrated. The ongoing geopolitical tensions in the Strait of Hormuz are not helping either. The resulting uncertainty surrounding energy prices is likely to put further upward pressure on actual inflation and inflation expectations. On the other hand, Australia's labour market remains notably tight, with unemployment at low levels (4.3%) and underemployment (5.9%) stable, while consumer spending appears marginally strong despite higher borrowing costs. These dynamics suggest that inflationary pressures may remain persistent. Given this outlook, the RBA may again feel compelled to raise the cash rate further to prevent inflation from becoming entrenched. Sustained increases in expected inflation can reinforce actual price pressures, making it significantly more challenging to restore price stability."

Tim Reardon, HIA (Increase): "Most recent CPI figures."

Shane Oliver, AMP (Increase): "Inflation rose again in March with underlying inflation remaining at 3.3%yoy or 3.5%yoy using the quarterly measure. This is well above target even before the second round impact of higher oil prices (to things like airfares, fertiliser, plastics and transport costs) impacts. And there is a rising risk that inflation expectations are rising again impacting wage claims. So the RBA is likely to hike again to improve its confidence that inflation will fall back to target on a reasonable timeframe."

Nalini Prasad, UNSW Sydney (Increase): Inflation has been higher than expected for longer than expected. Higher interest rates lead to lower inflation. There is likely to be sustained pressure on inflation in the months ahead due to higher oil prices. I think the RBA will want to signal that it wants to keep inflation expectations anchored."

Rich Harvey, Propertybuyer (Increase): "Inflation has spiked again at 4.6% due to numerous factors including massive overspending by Government, oil price shock due to Iran war, price increase filtering through to every sector of the economy, and the RBA's determination to quell inflation and get it back in the target 2% to 3% range."

Mark Crosby, Monash University (Increase): "The RBA is still caught between rising inflation and supply side forces outside their control. However, it would be prudent to raise again given elevated inflation."

Trent Wiltshire, RLB (Increase): "Inflation is too high even excluding the effects of the Middle East war. The war has pushed up inflation expectations so the RBA should raise rates to bring down actual inflation and keep expectations in check. If the war weighs on demand, then rates can be cut in future months."

Michael Yardney, Metropole Property Strategists (Increase): "The latest CPI figures don't really justify an urgent rate hike, with inflation at 4.6% and coming in below expectations. However, the 0.9% monthly jump, driven largely by fuel costs, will concern the RBA because of the risk these short-term shocks feed into broader inflation expectations, which is what they are ultimately trying to control. While there's a strong argument they should hold rates steady, given policy is already restrictive and much of this inflation is supply-driven, the RBA is still managing its credibility after previously underestimating inflation. That means they're likely to err on the side of being seen as tough, even if another rate rise does little to address the underlying causes of current price pressures. The risk, though, is that they overcorrect just as the economy is slowing, increasing pressure on households and potentially worsening structural issues like rental inflation without meaningfully reducing the real drivers of inflation."

Geoffrey Kingston, Macquarie University Business School (Increase): "The Bank is likely to hike in May. The latest inflation data remain distinctly above target. Unemployment remains low, at least for now."

Scott Kuru, Freedom Property Investors (Increase): "Unfortunately, despite the weaker than expected March CPI data, inflation won't be coming down fast enough for the RBA board members in their ivory tower. Unfortunately, pushing the cash rate up to 4.35% will probably have devastating consequences for a lot of Aussies already facing a cost of living crisis and high oil prices."

Kyle Rodda, Capital.com (Increase): "Inflation remains above target and a resilient labour market is no impediment to lifting rates."

Mathew Tiller, LJ Hooker Group (Increase): "The RBA is likely to raise rates at its next meeting, with inflation moving higher again. The recent spike has been driven by higher fuel prices, but inflation was already a concern before this. The economy is still holding up, with employment remaining relatively strong. Higher rates will impact borrowing capacity, and property prices will continue to moderate due to higher rates and uncertainty, although low listings and limited supply will continue to place a floor under prices."

Stella Huangfu, University of Sydney (Increase): "Today's CPI showed annual inflation at 4.6%, well above the RBA's 2–3% target. Underlying inflation also remains elevated, suggesting price pressures are not just a temporary fuel-price spike. This makes a rate increase next week more likely, as the RBA will want to keep inflation expectations anchored."

Tim Nelson, Griffith University (Increase): "Inflation has increased materially as higher energy costs have manifested in higher input costs for businesses. While this supply side inflation will not be addressed by higher rates, previous experience indicates that the RBA will increase the cash rate due to the underlying and headline inflation being outside the band."

Brodie Haupt, WLTH (Increase): "I believe we've only begun to feel the inflationary effects of the rise in oil and petrol prices. With headline inflation already above the target band of 2-3% in February, I would expect it to rise even more in March, forcing the RBA board to raise the cash rate once again."

Craig Emerson, Emerson Economics Pty Ltd (Increase): "Public comments by the Governor and Deputy Governor."

Garry Barrett, University of Sydney (Increase): "Core inflation persistently high and outside target range."

Nicholas Gruen, Lateral Economics (Increase): "They will be concerned that inflation is getting away from them. Indeed, they've publicly shared that concern."

Dale Gillham, Wealth Within Group (Increase): "I don't think they have much choice, given

inflation is still rising. That said, I don't really agree with it, given that government spending is really responsible for the inflation numbers we are getting."

Peter Boehm, Pathfinder Consulting (Increase): "High inflation, high government spending and low unemployment will combine to require the RBA to lift rates again. The current fuel crisis is simply adding fuel to the flame already set by the federal government."

Stephen Koukoulas, Market Economics (Increase): "It is of the view that growth needs to be very weak to get inflation back to target."

Jakob Madsen, University of Western Australia (Increase): "Inflation. They want to prevent the economy from getting into a price-wage spiral."

Matt Turner, GSC Finance (Increase): "Inflation will be running hot, employment stubbornly low and consumer expectation now to see another rate rise, giving them clear authority to do what they need to get on top of everything."