RBA to Maintain Steady Rates on Sept. 24, Expected Cut in Q1 2025: Reuters Poll

By Veronica Dudei Maia Khongwir

BENGALURU – Economists anticipate that Australia’s central bank will maintain its key policy interest rate at its current level during its upcoming meeting and for the remainder of the year, amid persistent price pressures. Most economists foresee the first rate cut to occur early next year.

As of July, inflation slowed to 3.5%, still exceeding the Reserve Bank of Australia’s target range of 2%-3%. Coupled with a robust job market, this situation leaves policymakers with limited options to reduce rates in the near term.

The Reserve Bank of Australia (RBA) is likely to lag behind other significant central banks that have already begun to cut rates, including those in New Zealand, the UK, Canada, and the U.S., where the Federal Reserve recently implemented a 50 basis point reduction.

All 45 economists surveyed between September 12 and 19 believe the RBA will maintain its official cash rate at 4.35% following its two-day meeting. A strong majority, 40 out of 44, predict that rates will remain steady through the end of the year, although interest rate futures indicate just over a 50% chance of a rate cut by then.

"There is no possibility of the RBA easing at this meeting," stated Robert Carnell, regional head of research for Asia-Pacific at ING. He added, "The risk is slightly to the upside: the RBA never really tightened rates sufficiently to slow the economy enough to control inflation, and that’s a question that has yet to be addressed."

Among major local banks, ANZ, NAB, and Westpac expect rates to remain unchanged this year, while CBA anticipates one cut before the year concludes. Major domestic banks contacted after the Federal Reserve’s decision did not alter their projections.

"We don’t believe the Fed’s 50 basis point reduction will directly impact the RBA’s decision," noted Catherine Birch, senior economist at ANZ. "We expect the RBA will maintain much of the hawkish language from the August meeting."

The RBA is expected to embark on its easing cycle next year, with anticipated cuts of 25 basis points in the first three quarters, followed by a pause, resulting in a cash rate of 3.60% by the final quarter of 2025.