The RBA continues to hold the cash rate, but anticipation of another cut mounts
The cash rate remains at 1.50% for now, but with property prices falling, the direction and timing of the next move have never been so uncertain.
The Reserve Bank of Australia has once again held the cash rate at 1.50%. The rate hasn't moved since August 2016, but this historically long, low setting may not hold for much longer.
Every month, Finder surveys a panel of economists and housing market experts, and 60% of them now say the RBA's next move will be to cut rates even further.
This is extraordinary. Throughout 2018, the conventional cash rate wisdom was that the RBA would hold the rate for now and raise it eventually. In December, 78% of experts said the next move would be a raise. Now it's only 40%.
The RBA hasn't met since early December, and the sudden shift in sentiment is the result of the ongoing downturn in the property market.
In his commentary for Finder's survey, Metropole's Michael Yardney said "With no wages growth and our challenging property markets and the real likelihood of further falls in property values especially in Sydney and Melbourne, the RBA will now have to seriously consider the option of lowering rates this year."
Property prices have dropped 6.1% nationwide since the market peaked in October 2017.
Why does the cash rate matter?
The official cash rate is a factor in determining mortgage interest rates, although the rate's long stagnation has seen lenders making their own rate moves regardless. It's also a health measure of the overall economy. And while it's a very simplistic summation, a low cash rate means the economy is struggling to grow.