Finder’s RBA survey: 77% of experts say major banks will follow CBA’s crypto decision
Economists are split on the role that cryptocurrency will play in Australia's economy over the next few years, according to a new poll from Finder.
In this month's Finder RBA Cash Rate Surveyâ„¢, 37 experts and economists weighed in on future cash rate moves and other issues relating to the state of the economy.
While all panellists correctly predicted a cash rate hold in December, nearly half (46%, 17/37) are expecting a rate increase in 2022.
Almost half who weighed in* (42%, 10/24) believe that cryptocurrency will have a greater role to play in the Australian economy over the next few years.
Dale Gillham of Wealth Within said that around 1 in 5 Australians are investing in or are looking to invest in cryptocurrencies in the near future.
"With the massive shift from being a cash society, Australians, like others around the world, are looking at alternatives that the government has little control over."
Malcolm Wood of Ord Minnett disagreed, noting, "As policy and rates normalise, the excess liquidity that has driven the crypto boom will dissipate."
Jeffrey Sheen of Macquarie University said private cryptocurrencies will remain speculative "meme" investments.
"They will never be able or allowed to compete with strong fiat currencies in transactions. Central bank digital currencies in some forms will become a significant part of the transaction landscape."
Experts say major banks will follow in CBA's crypto footsteps
Following Commonwealth Bank's announcement to allow its customers to hold and trade Bitcoin and other cryptocurrencies via its banking app, the majority of economists who weighed in (77%, 20/26) are expecting other major banks to follow.
Graham Cooke, head of consumer research at Finder, said interest in cryptocurrency is showing no signs of slowing down.
"Finder's Cryptocurrency Adoption Index shows that Australia has the third-highest rate of cryptocurrency ownership.
"It also shows that cryptocurrencies are more trusted in countries with less transparent economies."
The majority of experts (85%, 22/26) believe that cryptocurrency is seen as a safe haven for people in countries with a less trusted economic system.
Noel Whittaker from QUT noted that banks will push cryptocurrency further into the mainstream.
"Of course it will depend on the type of cryptocurrency, but I noticed banks are starting to offer it. This will increase its popularity."
The great resignation looms for the US, but not in Australia
Only a small number of economists who weighed in (28%, 7/25) believe that the "great resignation" being reported on in the US is a myth.
Christine Williams from Smarter Property Investing said people will need to return to the workforce once the initial COVID-19 burnout disappears.
"Eventually, people need money to survive. Once their savings or cash buffers dwindle, they will return to the workforce, probably with restrictions, i.e. work from home."
Noel Whittaker from QUT disagreed, saying the evidence was clear that many workers in the US are leaving their jobs.
"This will increase as the population ages."
Graham Cooke said it was a different story back home.
"While our panel is mostly in agreement that the great resignation is happening in the US, they're less convinced about this happening in Australia."
In fact, the majority of economists (76%, 22/29) don't think Australia is experiencing the same "great resignation" at all.
Tom Devitt from the Housing Industry Association said there was no evidence for it in Australia.
"The loss of overseas migrants is a bigger issue than a domestic 'great resignation'."
*Experts are not required to answer every question in the survey
Here's what our experts had to say:
Commentary
Annette Beacher, ausbiztv: "While uncertainty reigns for now, the RBA has one eye on local data and the other on the US Federal Reserve. Taking the cash rate off 'emergency levels' in the absence of an emergency is a no-brainer; it's just down to timing. November 2022 is my pick [for a rate increase]."
Nicholas Frappell, ABC Bullion: "I still lean towards an earlier than expected tightening despite multiple risks through 2022."
Shane Oliver, AMP Capital: "The combination of slightly higher than expected inflation than the RBA is anticipating, a decline in unemployment to around 4% over the next 12 months and a faster than expected pick up in wages growth taking it to near 3% are expected to see the RBA start raising interest in November next year."
David Robertson, Bendigo Bank: "The economic recovery underway (together with rising inflation) will see pressure on the RBA to increase official interest rates by next December, although there is uncertainty around the new Omicron variant. Assuming vaccines and boosters are effective for Omicron, the recovery should continue and higher rates should be expected through Financial Year 22/23."
Sean Langcake, BIS Oxford Economics: "The RBA clearly thinks markets have jumped the gun on their expectations for higher rates. Headline inflation will ease, but housing construction costs present upside risk to the RBA's dovish profile."
Peter Boehm, CLSA Premium: "The market is signalling interest rates will rise sooner than the RBA's official position, and with Central Banks in other countries starting to lift rates, the RBA may be forced to move sooner than anticipated. The key will be the period over which the RBA increases rates to their neutral position of between 2.5% and 3.0%, and by what increments. Even a 0.25% increase could have negative impacts on the economy. The RBA will want to ensure any rate increases don't lead to material asset price deflation and/or recessionary impacts."
Stephen Halmarick, Commonwealth Bank: "Underlying inflation to be at mid-point of target range by mid-2022."
Saul Eslake, Corinna Economic Advisory: "I think the RBA's right that the data and forecasts don't 'warrant' an increase in the cash rate in 2022 – but I think one will be 'warranted' by Q2 2023. The RBA won't be influenced by other central banks, including the Fed moving sooner; indeed, they'd likely welcome the further fall in the A$ which would result from that."
Craig Emerson, Emerson Economics: "The RBA will wait until underlying inflation is above 3% and wages growth is sustainably strong before acting."
Angela Jackson, Equity Economics: "There is significant uncertainty around the outlook, especially for inflation, and whether the RBA will need to move to tighten monetary policy earlier than currently indicated."
Tim Nelson, Griffith University: "Inflationary pressures are starting to build and supply chains are constrained."
Tom Devitt, Housing Industry Association: "Current supply chain issues are still expected to be temporary and not feed into ongoing inflation, which means it will still take a while for the tightening labour market to generate sustained stronger wage growth and inflation."
Alex Joiner, IFM Investors: "The RBA is wanting to see improvements in the labour market lift wages growth and drive inflation. I expect it will want to gauge the state of the economy through 2022 as tailwinds fade and borders reopen before concluding it is on a sustainable path to achieving this objective."
Michael Witts, ING Bank: "Difficult to be precise given the latest developments relating to COVID-19. Time is required to get some clarity on Omicron. While inflation may be an emerging issue, time is on the side of central banks."
Leanne Pilkington, Laing+Simmons: "Interest rate noise is getting louder but the Reserve Bank has been clear in its communication that rates won't go up unless economic and inflationary pressures take an unexpected turn. The consistency of this position is appropriate."
Nicholas Gruen, Lateral Economics: "The Bank will become wary about inflation faster than it's still saying it will. I hope I'm wrong, and I may well be, as they do seem to have changed their thinking, but until I see the leopard change its spots, I won't revise my expectation that they will not."
Mathew Tiller, LJ Hooker: "Despite increasing inflationary pressures and ongoing property price growth, the RBA will continue to hold rates steady over the short term. The RBA is expected to raise rates once it is comfortable that the Australian economy is back on a strong footing and the Omicron variant of COVID-19 doesn't present a risk to growth."
Geoffrey Harold Kingston, Macquarie University: "The RBA will probably lag the Fed in raising rates by several months. The Fed will probably raise rates late next year."
Jeffrey Sheen, Macquarie University: "Despite significant uncertainty about the persistence of inflationary pressures, I expect that normalisation of the cash rate will only begin to occur in 2023 at the earliest."
Michael Yardney, Metropole Property Strategists: "The RBA won't increase rates until inflation is well entrenched and wages have risen and will keep growing. At present one-off factors are driving up inflation."
Mark Crosby, Monash University: "The RBA will respond to entrenched inflation by the second half of next year."
Julia Newbould, Money magazine: "I think with the property market still overheated, there will be attempts at cooling it earlier than thought."
Susan Mitchell, Mortgage Choice: "In its final meeting of 2021, I don't expect the Reserve Bank board to make any changes to the official cash rate. Despite this, we have seen a lot of recent movement to home loan interest rates. Interest rates remain low by historical standards, but I think we can expect to see further changes in the New Year, especially with fixed interest rates."
Andrew Wilson, My Housing Market: "Inflation and wages highly unlikely to meet the sustained RBA target ranges prior to 2024 as reiterated by the Bank in most recent meeting."
Alan Oster, NAB: "It will take time for wages to reach the level to sustain core inflation around 2.5% or higher."
Malcolm Wood, Ord Minnett: "Condition for a rate rise of wages > 3% and underlying inflation sustainably in target band not met until the first half of 2023."
Rich Harvey, Propertybuyer: "Likely to see a rate rise in Q4 of 2022 due to inflationary pressure and positive economic recovery."
Noel Whittaker, QUT: "I think the timing of any rate rise is anybody's guess. But I think it will be sooner rather than later."
Cameron Kusher, REA Group: "I believe much of the inflation, in Australia at least, is transitory and will settle down as supply chains reopen next year. The RBA still has a lot of work to do to sustainably achieve their inflation and employment targets and that will take time."
Jason Azzopardi, Resimac: "Long term inflationary settings will not warrant until late next year."
Jakob B. Madsen, University of Western Australia: "The RBA has previously indicated a firm commitment to fixed rate in the foreseeable future. Now they indicate that they may increase the rate in 2022."
Jonathan Chancellor, Urban.com.au: "The central bank often goes a little too late, and for all its monitoring, will likely leave any rate change until 2023 given the numbers are bouncing around."
Dale Gillham, Wealth Within: "The RBA has come out and said that whilst inflation is up, they believe it is only temporary. The current shortages and supply chain issues are putting pressure on inflation, not strong economic growth, and so I would think raising interest rates would not be on the agenda for a while."
Brodie Haupt, WLTH: "With continued uncertainty and rising pressure on the economy, I don't think there will be a change to the cash rate until 2023. I feel it will take some time to meet the sustained 2-3% target range."
Other participants: Mark Brimble, Griffith University; Christine Williams, Smarter Property Investing; and Bill Evans, Westpac.
