Economists widely expect the Reserve Bank of Australia (RBA) to slash interest rates again today, but some experts disagree, arguing a 'hold' announcement is more likely.
The latest quarterly survey by the Australian Financial Review (AFR) shows that 32 out of 36 economists predict the central bank will cut the cash rate to 3.6% from 3.85% this afternoon.
Many economists have taken last month's easing inflation data as a positive sign for July's announcement. The data shows pressure on pricing eased to 2.4% in May, the lowest rate in almost four years, the AFR noted.
But the survey responses show four economists don't agree, and another supports the view.
Economists at Citi, Betashares, Morgans Financial, and Macroeconomics Advisory all said they expect the RBA to hold rates for its July announcement. Bank of America also has the same expectation.
Why might the RBA hold the cash rate for July?
According to the AFR survey, Citi chief economist Josh Williamson said that a July hold made more sense, adding that more data was needed for the RBA to cut rates again.
"We would prefer to see the RBA keep the cash rate unchanged in July and instead wait for the complete Q2 CPI data, updated staff activity forecasts and business liaison before cutting again," he said.
"By waiting another five weeks to get more data and liaison evidence, the RBA would fulfil its preference to 'move cautiously and predictably' in lowering interest rates," he said in the survey.
He also added that markets had been relatively calm since May, after the turmoil caused by US tariff proposals.
Citi also warned the central bank against moving too fast.
"The Australian economy doesn't need such a fast pace of easing … particularly when the hiking cycle was protracted and the cash rate peak below that of central bank peers," Williamson told the AFR survey.
Nick Stenner, Bank of America's head of Australia and New Zealand economics, said he also expected the RBA to hold rates at 3.85%.
"Underlying inflation [is] at the top of the band and not expected to hit the target midpoint before mid-2027," Stenner said.
"The RBA will not necessarily be pushed into cutting to validate market pricing," Stenner said. "The monetary policy board will be guided by the economic data and evolving assessment of risks."
He added that the country was facing "a positive output gap with demand accelerating amid supply side constraints, and a labour market tighter than the RBA's view of full employment".
While GDP was weak in the first quarter, the result "understates private demand momentum".
"We believe the RBA will adopt a wait-and-see approach to assessing any domestic impact from global developments before adjusting policy."
Macroeconomics Advisory chief economist Stephen Anthony agrees that the central bank should wait until unemployment rises.
"There is what the RBA should do and what it will do. We would argue that they should wait and see whether Australian labour markets soften over [the next two quarters of the year]," Anthony told the AFR.
"We suspect that the RBA has in mind a far more aggressive rate-cutting playbook."
The S&P/ASX 200 Index (ASX: XJO) has risen 0.14% as of 11am this morning and ahead of the RBA announcement.
One big four bank even preemptively delivered a rate cut to its customers last week, six days ahead of the announcement.
ANZ Group Holdings Ltd (ASX: ANZ) announced it was cutting interest rates on its fixed-rate home loans by up to 0.35%. The move lowered its lowest fixed offering to 5.19%, the lowest of any of the big four banks.
