RBA On The Brink: Rate Cut Speculation Heats Up

The information on this website is general in nature and does not take into account your objectives, financial situation, or needs. Consider seeking personal advice from a licensed adviser before acting on any information.

The survey, conducted as part of the Finder RBA Cash Rate Survey, reveals that 73% of economists and market specialists foresee a 25-basis point rate cut at next week's meeting. This adjustment could lower the policy rate from 4.35% to 4.10%, marking the first decrease in five years, according to findings initially reported by Patrick Buncsi at Financial Services Online.

While most forecast the cut for February, a subset of experts opts for alternative timelines. Five survey participants predict an April reduction, whereas two others anticipate a rate cut happening by May. Divergent opinions highlight the complexity of the economic landscape and the challenges faced by policymakers.

Shane Oliver, chief economist at AMP Capital, is among those expecting the RBA to act decisively. "Underlying inflation is falling faster than the RBA expected and has been running around target over the last six months, economic activity is a bit weaker than expected and Trump’s trade war poses more risks to Australian growth than inflation," Oliver remarked, pointing to international tensions adding weight to the decision.

The prospect of a rate cut is driven not only by global factors but also by domestic concerns, including election year dynamics and noteworthy dips in monthly inflation figures. Critics argue that the combination of weak growth and international trade volatility necessitates a proactive approach from the RBA.

Despite the apparent urgency, some economists urge caution. QUT Adjunct Professor Noel Whittaker is sceptical of a prompt cut, citing persistent inflation within the building sector, severe labour shortages, and robust employment figures. "The problem is inflation in the building industry remains massive, labour shortages are severe, and the job market is still strong - keeping inflationary pressure on the economy," Whittaker notes.

Other analysts mirror Whittaker's concerns, pointing towards stubborn core inflation rates and price pressures within specific sectors. Sean Langcake of Oxford Economics Australia warns that the February decision is closely contested. He elaborates, "The February decision will be a very close run. Inflation in Q4 was a little weaker than the RBA expected."

Langcake expressed the ongoing deliberation, cautioning that despite weaker inflation indicators, "Services inflation is still looking very strong - a byproduct of the labour market still operating beyond its capacity." He suggests the RBA might delay action to observe labour market developments over the coming months.

The cash rate has remained steady since November 2023, maintaining a level of 4.35%. Nevertheless, as economic tides shift, the RBA faces critical decisions that could reshape the financial landscape for Australian consumers and businesses alike.

Published:Monday, 17th Feb 2025
Author: Paige Estritori

Please Note: We do not endorse any specific products or companies. Some content is sourced from third parties, including press releases, and may not be independently verified for accuracy or completeness.

Share this news item:

Finance News

Clear

RBA's Third Rate Hike in 2026: Implications for Australian Businesses

25 May 2026: Paige Estritori

The Reserve Bank of Australia (RBA) has raised the official cash rate by 0.25 percentage points to 4.35% on 5 May 2026, marking the third increase this year. This decision aims to address escalating inflationary pressures affecting the Australian economy. - read more

High-Risk SMEs Escalate Search for Financing Amid Stricter Lending Criteria

25 May 2026: Paige Estritori

Recent data indicates a notable trend among high-risk small businesses in Australia: an increase in 'credit shopping,' where these enterprises apply to multiple lenders in pursuit of financing. This behaviour has become more prevalent as overall business credit demand has softened, with a marginal decline of 0.4% in the first quarter of 2026. - read more

Westpac's Resilient Performance: A$3.4 Billion Profit in Challenging Economic Times

25 May 2026: Paige Estritori

Westpac Banking Corporation has reported a statutory net profit of A$3.4 billion for the half-year ending 31 March 2026. This performance underscores the bank's resilience amid a shifting economic landscape marked by rising interest rates and global uncertainties. - read more

MYOB and Mastercard Introduce Open Banking for Australian SMEs

17 May 2026: Paige Estritori

In a significant development for Australian small and medium-sized enterprises (SMEs), MYOB has partnered with Mastercard to roll out Open Banking capabilities. This initiative aims to provide SMEs with faster, safer, and more reliable bank connections, streamlining financial management processes. - read more

ScotPac Partners with UBS to Boost SME Funding Capacity

17 May 2026: Paige Estritori

ScotPac, Australia's largest non-bank business lender, has announced a new warehouse facility agreement with UBS AG Australia Branch. This strategic partnership aims to strengthen and diversify ScotPac's funding platform, enabling the provision of innovative financing solutions to small and medium-sized enterprises (SMEs) across the country. - read more

Federal Budget 2026: Tax Changes and Their Impact on SMEs

17 May 2026: Paige Estritori

The Australian Federal Budget for 2026 introduces several tax measures that will significantly impact small and medium-sized enterprises (SMEs). Business owners must understand these changes to effectively manage cash flow and make informed investment decisions. - read more

OnDeck Australia Enhances SME Financing with Increased Loan Limits

09 May 2026: Paige Estritori

In a significant move to support Australian small and medium-sized enterprises (SMEs), OnDeck Australia has announced an increase in the maximum limit for its Lightning Loans Plus product, now offering up to $300,000 in unsecured funding. This enhancement aims to provide SMEs with faster and more flexible financing options to meet their growth and operational needs. - read more

Click for more Finance News