Interest rates tipped to fall in 2024
By the time incoming Reserve Bank governor Michele Bullock delivers her first interest rate decision in just over two months, borrowers may have already seen the last hike.
Instead, her leadership could mark the start of a new cycle with forecasts Ms Bullock will cut interest rates within months of taking over the top job.
Some economists expect the cash rate will return to the low 3s by the end of 2024, providing some relief for borrowers who have seen their monthly repayments jump almost 60% since May 2022.
Prime Minister Anthony Albanese and Treasurer Jim Chalmers announced on Friday that Ms Bullock would take over from current RBA governor Philip Lowe when his seven-year term expires in mid-September.
While Mr Lowe will be remembered by many for delivering the fastest tightening cycle in a generation – lifting the cash rate 4 percentage points in the space of just 13 months – economists anticipate the heavy lifting may be done by the time Ms Bullock takes the reins.
The outlook for interest rates
The minutes of the July RBA meeting, released Tuesday, showed it was a close call to hold the cash rate steady at 4.1%, with the board considering both a pause and another 25 basis point increase.
“Noting both the uncertainty around the outlook and the significant increase in interest rates to date, members agreed to hold the cash rate steady and reassess the situation at the August meeting,” the minutes said.
Thursday’s jobs data, as well as next week’s quarterly inflation and household spending data will help to shape the RBA’s decision in August.
The next phase of the cycle: rate cuts
Economists are divided over the path forward for interest rates, with the consensus for one or two more hikes over August and September, before cuts next year. Some economists say the first cut could come as soon as February.