The next interest rate change will be down, not up, experts say, after the Reserve Bank put rates on hold for a third straight month on Tuesday.

The cash rate target remains at a decade-high 4.1 per cent, and most experts think that’s where it will peak now that inflation is falling.

This means that more than $1100 has been added to repayments on a $500,000, 25-year home loan since May 2022.

But anyone hoping rates will come down as fast as they went up will probably be disappointed, with Oxford Australia’s head of macroeconomic forecasting Sean Langcake saying the first interest rate cut is probably still about 12 months away.

“The next move is most likely a cut, but it’s an awfully long time away,” Mr Langcake said.

“We’re going to have to live with them [interest rates] at this level for quite a long time.”

EY chief economist Cherelle Murphy delivered a similar assessment.

“The Reserve Bank has not closed the door to further tightening, but additional rate hikes look increasingly unnecessary as the economy moves broadly in line with the central bank’s expectations,” Ms Murphy said.

Major bank forecasters are all anticipating an interest rate cut in 2024, with ANZ, NAB and Westpac tipping the second half of the year, while economists at the Commonwealth Bank think the RBA will move earlier in March.

The intervening period will be defined by two grim realities for families, both of which were canvassed by RBA boss Philip Lowe on Tuesday.

In his final rate statement as central bank governor, Dr Lowe said that the hikes passed to date are increasingly being felt across the economy, which is now slowing rapidly as household budgets come under greater strain.

The second reality is that keeping up mortgage repayments will become even harder for some workers as the labour market starts deteriorating.

It hasn’t happened quite yet, but Dr Lowe thinks it’s only a matter of time.

Slowing economy

“Given that the economy and employment are forecast to grow below trend, the unemployment rate is expected to rise gradually to around 4.5 per cent [from 3.7 per cent] late next year,” he said on Tuesday.

June-quarter growth figures due from the ABS on Wednesday will shed fresh light on how quickly these realities will hit families, with Deloitte Access Economics partner Stephen Smith calling the outlook “precarious”.

“The Reserve Bank is increasingly realising the precarious position the Australian economy is in,” Mr Smith said.

“This is borne out by the facts. Monthly inflation indicator data released last week shows inflation continues to cool as supply-side factors abate, while the cumulative impact of 12 earlier rate hikes force Australians to tighten their purse strings.”

RateCity research director Sally Tindall said that despite expectations of an extended rate pause, home owners should still be prepared for a hike.

That’s because one is still possible, particularly if inflation surprises on the upside over the September quarter.

“CBA is predicting the first cut in March while ANZ believes the cash rate won’t move south until late 2024. That’s a huge difference for anyone with a mortgage,” she said.

“A watched pot never boils. If you’ve got a mortgage, put your head down and come up with a budget that will withstand another rate hike, rather than a rate cut.

“If and when a cut does finally come your way, you can be pleasantly surprised.”