Enthusiasm for rate cuts wanes following February's decision
The Reserve Bank of Australia (RBA) is widely expected to hold the cash rate at 4.1% in April, according to a recent survey.
Of the 34 economists and experts surveyed by comparison site Finder, 94% predicted the RBA would maintain its current rate, reflecting a shift in expectations for further rate cuts.
Enthusiasm for rate cuts has waned since February when 22% of experts had anticipated back-to-back cuts in 2025. While borrowers had hoped for rapid relief following the February rate cut, the outlook for further reductions has become more cautious.
“The February cut signalled a turning point for many cash-strapped borrowers – they hoped a couple more would be coming thick and fast,” said Graham Cooke, head of consumer research at Finder. “New inflation figures show headline inflation is within target range, so while we’re unlikely to see a second rate cut in April, we’re anticipating further relief from May onwards.”
Matthew Greenwood-Nimmo from the University of Melbourne said the RBA board is likely to take a measured approach before making further adjustments.
“Given that the economic data does not currently provide a strong case for further easing, it is likely that the cash rate will remain constant for now,” Greenwood-Nimmo said.
However, a minority view came from Jeffrey Sheen of Macquarie University, who suggested the RBA is slightly more inclined to cut the rate than hold in April.
“The headline inflation rate seems settled within the target range,” Sheen said. “While core or underlying inflation measured by the trimmed rate is just above the range, more sophisticated statistical measures indicate that it is in the range.
“With the escalating global tariff war and the likely weakening of global economic activity, the RBA should act now in anticipation. The board will be torn between the risk that inflation is not fully under control and the risk of a future downturn and recession.”
Although most panellists agreed on an April hold, only 79% felt the RBA should maintain the rate, while 18% believed a rate cut would be a more prudent move.
“As well as sustained cost-of-living pressure and moderating inflation, the unexpected hit to employment figures has widened the window of opportunity for the RBA to cut rates, which it is expected to do in coming months anyway,” said Leanne Pilkington, chief executive of Laing+Simmons.
Looking ahead, 63% of experts forecast two to three more rate cuts this year, while 33% expect just one additional cut for 2025.
Rate expectations among Australia’s big four banks are becoming increasingly divided. National Australia Bank predicts the RBA will implement four more rate cuts, lowering the cash rate to 3.1% by February 2026. Commonwealth Bank and Westpac both expect the rate to settle at 3.35% by the end of the year. In contrast, ANZ anticipates only one additional cut, which would bring the rate to 3.85%.
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