What to expect from the RBA meeting in March 2024

According to many economists, the Reserve Bank of Australia (RBA) is unlikely to change the national cash rate at its upcoming meeting on 18 and 19 March 2024. The real question is whether recent economic updates could affect when the RBA is likely to announce its first rate cut.

Some of the factors that could potentially affect the RBA’s upcoming decision and the forecasting of economists include:

• The latest National Accounts figures show that Australia’s economy has experienced a relatively weak quarter of growth.
• The value of new and refinanced home loans dropped for the second consecutive month.
• Australian households are going into even more credit card debt as shoppers struggled to clear their balances left over from November last year. 

RBA

According to the RBA minutes for the February 2024 meeting, while there had been further progress towards the Board’s objectives of lowering Australia’s inflation, more progress was required and the outlook remained uncertain. Despite a faster than expected moderation in inflation, services price inflation remained high, having declined only a little, and was unlikely to be responsive to monetary policy in the near term.

While the Board ultimately decided to keep the cash rate on hold, the members agreed that it was appropriate not to rule out a further increase.

“…members noted that it would take some time before they could have sufficient confidence that inflation would return to target within a reasonable timeframe. Uncertainty about the outlook for the economy was high. Members also observed that the costs of inflation not returning to target within the envisaged timeframe were potentially very high.”

Federal Government

In response to the recent national accounts figures, Federal Treasurer Jim Chalmers acknowledged that higher interest rates are continuing to burden family budgets. However, in various interviews the Treasurer has declined to second-guess the independent RBA’s past decisions (such as hiking rates in November 2023) or to pre-empt the Board’s future decisions:

“In terms of the fiscal position, it's been really clear to here and it will be really clear from here that whatever we do will be consistent with the objectives of the independent Reserve Bank, not running at cross‑purposes. We have played a meaningful role in seeing inflation come off in our economy off those high peaks.”

ANZ - hold

Despite soft quarterly GDP data, ANZ believes the RBA will keep the cash rate on hold this month. A rate cut in November 2024 is also still expected, though “the risk of earlier easing is increasing with the labour market cooling and inflation surprising to the downside in Q4.”

“There’s nothing in the GDP details that changes our view on the RBA or our outlook for this year. That is we still expect growth to remain weak through 2024, although conditions should improve a little in the second half of the year following tax cuts in July.” 

Commonwealth Bank - hold

While Commonwealth Bank (CBA) noted that the RBA governor has not ruled out either future rate hikes or cuts in the coming months, no further cash rate increases are anticipated for the current cycle. CBA’s central forecast scenario sees the RBA commence its easing cycle in September 2024, with “a string of rate cuts” to follow to help prevent the unemployment rate from rising.

“The RBA’s highly aggressive rate hiking cycle has clearly worked to slow demand growth in the economy. Rising mortgage payments along with a lift in tax payable and the effects of elevated inflation have weighed on household purchasing power.“ 

“Economic growth will remain below trend over coming quarters and the unemployment rate will continue to lift. This will in turn alleviate wages pressures and see disinflation continue.”

NAB - hold

Interest rates have hit a peak at 4.35%, according to NAB economists, and are unlikely to decrease soon. The next rate cut from the RBA isn’t expected before November 2024, with the cash rate to gradually fall to 3.10% by the end of 2025. That said, lower than forecast inflation and a slower rate of growth in cost of living could also help to bring forward rate cut forecasts: 

“Although the timing of rate cuts remains uncertain, lower interest rates should see a more substantial lift in sentiment, but also deliver a boost to borrowing capacity and lower the serviceability assessment hurdle. How sensitive the market is to rate cuts remains a key unknown. We would need to see a bit more than seven cash rate cuts of 25 basis points each before interest rates returned to the pre-COVID decade average of 2.6%.” 

Westpac - hold

According to Westpac, the RBA would likely be happy with the current slow level of domestic demand in Australia’s economy, as it could help to bring demand back into balance with supply to combat inflation. With this in mind, Westpac is forecasting that the RBA “will reach the point of being prepared to reduce some of the contractionary stance of policy late in the year, most likely starting from September.”

“Still, it is important to emphasise that we believe recovery will prove gradual, with growth not anticipated to return to trend until end-2025.”

To help you stay up to date with the latest changes to the national cash rate, as well as any adjustments to interest rates for home loans and savings accounts that follow, be sure to visit the RateCity RBA Rate Tracker hub.

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