CANBERRA, AAP – Economists will be scrutinising the latest Reserve Bank of Australia board minutes for further views on the inflation outlook, as they try to nail down the likely timing of the first official interest rate rise in a decade.
However, economists admit it might be difficult to find anything new in Tuesday’s report after the series of RBA events since the February 1 board meeting.
Aside from governor Philip Lowe’s post-meeting statement, he has given a speech to the National Press Club and appeared before the House of Representatives economics committee, while the RBA has released its quarterly statement on monetary policy.
Appearing before federal politicians last week, Dr Lowe reiterated that a rise in the cash rate from a record low 0.1 per cent is plausible this year in the face of rising inflation and the prospect of unemployment dropping to its lowest level in decades below four per cent.
That said, he still wants to see at least a couple more quarterly inflation reports before making a final decision on rates.
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The March quarter consumer price index is due on April 27 and the June quarter report is released on July 27.
As such, many economists are predicting a rise in the cash rate at the August board meeting.
“While there is ongoing debate about the exact timing of the first hike, one thing economists do agree on is that it is only a matter of time before the RBA is forced to lift the cash rate,” St George economist Matthew Bunny says.
However, the governor has tried to soothe borrowers’ concerns about the prospect of higher rates, saying it will occur at a time of stronger wages and jobs growth.
Whether Australians are happy with such a response may be revealed in the latest weekly ANZ-Roy Morgan consumer confidence survey, also due on Tuesday.
Last week the confidence index fell 1.9 per cent on interest rate concerns.
Respondents’ views on their current and future financial conditions dropped to their lowest level since late 2020 and when the economy was only just recovering from second wave of the pandemic.