As the festive season approaches, some Australians had hoped for financial relief through an interest rate cut.
However, according to a recent survey of economists conducted by the comparison website Finder, the Reserve Bank of Australia (RBA) is unlikely to announce a rate reduction at its final board meeting of the year.
The consensus among all 40 experts polled is that the central bank will maintain the current interest rate at 4.35 per cent. This decision comes after a challenging year for many Australians, who have been grappling with a cost-of-living crisis that has put significant pressure on household budgets.
Graham Cooke, head of consumer research at Finder, highlighted a silver lining on the horizon. Most experts anticipate that the RBA will introduce a rate cut within the first three meetings of the next financial year, which could provide some much-needed relief.
Shane Oliver from AMP, one of the experts surveyed, suggested that while a May cut is likely, the current economic conditions—characterised by a downward trend in inflation and weaker-than-expected growth—could justify an earlier reduction. He mentioned that there is still a high chance of a cut as early as February.
The panel of experts also shared their economic advice for the coming year. Richard Holden from the University of New South Wales offered a one-word strategy: ‘Pray.’
However, others provided more actionable guidance. Peter Boehm of Pathfinder Consulting advised Australians to ‘Save and don’t spend. Focus on essentials and not the nice to-haves. Teach your children the basics of financial management, including how to save.’
For those considering entering the property market, Matt Turner of GSC Finance Solutions suggested making a move before the anticipated rate cut. He noted a sense of optimism brewing among his client base, expecting that the first rate cut would break down mental barriers and encourage buyers to return to the market.
Despite the lack of immediate relief, more than half of the experts (58 per cent) believe that most Australians will be financially better off next year. This optimism may be a small comfort to those currently feeling the squeeze, but it does suggest that there may be light at the end of the tunnel.
We’d love to hear from you about how the current economic climate is affecting your holiday plans and financial decisions. Are you changing your approach to spending this festive season? Do you have tips for managing finances during these challenging times? Share your thoughts and advice in the comments below, and let’s navigate these economic waters together.
Also read: Will interest rates rise today?
