Several economists disagree on whether Reserve Bank of Australia should increase, decrease or maintain the official cash rate during its next meeting, which will be held in May.
In the latest Finder RBA cash rate survey, out of 42 economists surveyed 23 forecast an increase while 19 predicted no change. Twenty-one economists believe the RBA will raise the cash rate to 3.85 percent by 0.25 percentage points, while two others predict an increase of 0.15 percentage points.
In the future, 75% of experts believe that the RBA is likely to maintain the current cash rate, and 32 out of 42 experts predict no change. Panelists were divided in their opinions on how to manage inflationary pressures while not burdening householders unduly. Some experts believe the latest inflation numbers will justify an increase in rates, while others think the inflation has already peaked. The RBA should hold the rate.
Graham Cooke of Finder’s consumer research said that the panel had again come to a divided conclusion. This month’s results are the tightest since the RBA began hiking the cash rate. It highlights the difficulty in managing inflationary pressures while not breaking household budgets.
While it is anyone’s guess, if there is any indication that the first 10 rate increases are just beginning to take effect, then I believe the RBA will hold this month. Cooke stated that the full impact of new rates might not be felt until late this year.
Angela Jackson, Impact Economics and Policy, said that she expected a rate hike. “The latest figures on inflation will be enough to justify the RBA’s decision to increase rates. Services inflation in particular is likely to have a significant impact on their decision.”
Shane Oliver, from AMP, said that it is more likely to remain. “Inflation is now falling faster than expected by the RBA. Oliver said that although it was a close call the RBA should leave rates on hold until May, and then cut rates in the future to support the struggling economy.
Rent crisis in Australia
According to a recent survey conducted by Finder, 86 percent of experts in Australia believe that Australia is experiencing a rental crisis. Renters are under immense pressure due to the lack of rental properties available. In April, almost half were unable to pay their rent.
According to Graham Cooke of Finder’s consumer research, the rental crisis affects renters as much as it does mortgage holders. While searching for rental properties, renters face long queues and fierce competition.
Leanne Pilkington, from Laing+Simmons, added that renters had little or no choice due to the lack of rental properties. Investors are reluctant to invest in residential property due to the rising mortgage payments, anti-landlord laws, and reduced returns.
James Morley, from The University of Sydney, highlighted that the supply of rental properties is limited and cannot be quickly adjusted. He attributed high rental demand, including from students in higher education, to returning migrants.
Renters, investors and the entire real estate industry in Australia have been severely affected by Australia’s rental crisis.