The Reserve Bank has decided to hold the cash rate at 0.75 per cent for November, after it undertook its third rate cut for the year last month.
The Reserve Bank of Australia (RBA) slashed the rate to its current historic low in October, following two consecutive cuts in June and July.
In the lead up to the central bank’s meeting today, top market and economic experts had unanimously predicted the move to hold.
Comparison site Finder found in its monthly rate survey of financial experts and economists that almost two thirds of respondents anticipated the rate will drop 25 basis points to 0.5 per cent with the RBA’s first meeting in 2020, in February.
Around one fifth (21 per cent) have called a fourth cut for the year in December.
IFM Investors chief economist Alex Joiner commented: “A stabilisation of the labour market gives the RBA some time to assess the impact of its policy easing to date.”
Queensland Investment Corporation chief economist Matthew Peter said likewise, noting: “With the labour market holding up and a stabilisation in global market sentiment around the prospects of recession and a rebound in the Australian housing market, the RBA can afford to take a breather in their current easing cycle.”
Graham Cooke, insights manager at Finder said the general consensus among experts is that the decreases have had little impact so far.
“We’ve seen multiple references to the RBA firing blanks with these cuts and running out of bullets in the process,” Mr Cooke said.
“If true, it’s hard to believe that flogging the same horse will produce a different outcome. The RBA has not spoken fondly about negative interest rates in other countries, so I’d expect extra cash to be printed before we see a zero or sub-zero cash rate.”
Consumers fear recession, drop in economic sentiment
While half of Australians were found to be expecting a recession in the next 12 months, in the Finder Consumer Sentiment Tracker, only 9 per cent of experts have indicated they think it is likely. Most (69 per cent) have said it is either unlikely or very unlikely.
Experts have noted the concern among consumers, with half (56 per cent) telling Finder they think households are holding back on spending in fear of recession.
However the average percentage of economists who felt positive across five economic metrics measured by Finder’s Economic Sentiment Tracker (employment, wage growth, housing affordability, cost of living and household debt) fell from 30 per cent in December last year to only 14 per cent this month.
“I’ve never before seen all five of these metrics in the teens,” Mr Cooke said.
The tracker, established in March last year, set its all-time low during the last month for economic sentiment in housing affordability (17 per cent).
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