RBA unlikely to cut interest rates in the near term

CBA’s head of Australian economics Gareth Aird says not only is there a “near-term risk” of further rate rises, but any cuts will be slower than previously expected.

“The RBA will not be cutting rates in the near term because they have just had an inflation premium that was just a little bit stronger than they had forecast,” Mr Aird told Sky News Business Editor Ross Greenwood.

“You could say the consumers are just a little bit weaker than they have anticipated but if they’re going to do anything in the next three to four months they will be more likely to hike than cut.

“We think they won’t actually hike, we see them on hold and if we get through the next six months with an economy that’s continuing to slow a rate of inflation.

“Then we can be optimistic that at the back end of this year, we do actually see some easing because the RBA is probably going to have to take the cash rate down about 125 base points from where it is right now to take it away from a restrictive setting to something that looks more neutral.”

RBA unlikely to cut interest rates in the near term