The Reserve Bank of Australia is set to hold its benchmark interest rate steady, but a new survey indicates that consumers should prepare for out-of-cycle rate hikes.
All 14 economists surveyed by AAP expect the RBA to leave the cash rate steady at a record low of 1.5 per cent at its March board meeting tomorrow.
Reserve Bank governor Philip Lowe in February spoke three times about keeping rates on hold to balance the need to boost inflation while maintaining financial stability amid record household debt.
JP Morgan senior economist Sally Auld said the market’s focus following the board meeting will be on the central bank’s comments about December-quarter economic growth of 1.1 per cent, which came in well above the RBA’s implied forecast of 0.8 per cent.
She said the tone of Dr Lowe’s remarks on the economy on Tuesday afternoon probably won’t deviate from the optimistic note struck in February’s interest rates statement.
“Still, we expect some RBA caution that the fourth quarter’s pace of consumption will be sustained, given that the staff assumes that households will be held back by elevated debt levels,” Ms Auld said in a note.
Meanwhile, in a new finder.com.au survey of 38 economists and interest rate experts, 90 per cent of respondents said they expected out-of-cycle rate rises from lenders in the near future.
The website’s insights manager Graham Cooke said first-homebuyers should practice their due diligence.
“With banks likely to lift mortgage rates out of cycle, the onus is on first-homebuyers to factor in potential rate rises to their budgets,” he said in a statement.
“Generally, mortgage holders should account for 2 to 3 per cent on top of their current repayments to avoid rate shock.”
