Australians can expect the Reserve Bank to sit on its hands again this week, with interest rates tipped to remain on ice for the sixth meeting in a row as economic growth grinds to a near-halt.

Economists say central bankers want to wait for fresh quarterly inflation figures before deciding whether to change the cash rate target – data that won’t be available until their August meeting.

It means rates will stay at a decade-high 4.35 per cent for the time being, further delaying the prospect of any mortgage relief for households struggling to keep up with monthly repayments.

“We expect the cash rate will be left on hold in what should be a straightforward decision,” Commonwealth Bank chief economist Gareth Aird said.

“The recent run of key economic data has largely been in line with the RBA’s forecasts.”

Oxford Australia head of macroeconomic forecasting Sean Langcake also predicts the RBA will pause again this week and won’t cut rates until early 2025, provided inflation eases as planned.

Langcake said GDP data this week showed the economy is slowing faster than was hoped, which will also be a concern for the RBA.

“The real economy is going a little bit slower than was expected at the May meeting,” he said.

RBA looks through budget, wage hike

A fair bit has happened since the last rate meeting, giving the board plenty to mull over this week, including the federal budget and the industrial umpire delivering a minimum wage hike.

The annual wage boost, at 3.75 per cent, was only slightly ahead of inflation (3.6 per cent), making it unlikely to upset its plan to reduce price growth to below 3 per cent by late 2025.

The budget was somewhat more dramatic, with some economists fearing energy bill rebates and the tax cuts would free up disposable income, adding to stubborn inflationary pressures.

But it appears as though the board is looking through the noise, with the tax cuts already factored into their forecasts and governor Michele Bullock saying the rebates won’t have a “material” effect on the outlook.

The governor told a parliamentary hearing earlier in June that households were unlikely to go on spending sprees with their energy rebates, a view that has been backed by consumer surveys.

“If you think about the $300, or the $75 a quarter, off your electricity bill, are people going to go out and spend big on that?” Bullock said.

“I really don’t think so.”

Interest rates outlook

Without any external policy decisions pushing the RBA away from its extended rates pause, the other factors to consider are slowing economic growth and how inflation has been tracking.

There has been a split among experts about the timeline for rate cuts recently after prices rose faster than anticipated in April, with ANZ Bank experts now not tipping any relief until next year.

Aird still thinks the RBA will cut rates in late 2024 though, and that the next meeting to watch will be in August, when the ABS will have published inflation figures for the entire June quarter.

“The RBA puts much more weight on the quarterly CPI than the monthly CPI indicator,” he said.

A stalling in economic growth as households feel the effects of higher interest rates will be a key factor easing inflation in the second half of 2024, hopefully moving prices closer to RBA targets.

But there are also still risks, including how the balance of productivity and wages growth will play out and also global headwinds from higher-than-anticipated oil prices.

Langcake said services inflation remains “extremely persistent” and is a key risk to the outlook for prices, making it unlikely that the RBA will be in a position to cut rates before early 2025.

“These prices are still very hot,” he said.

One downside risk that may prompt the RBA to cut rates sooner would be a faster-than-expected hike in unemployment. Langcake said, but there’s no evidence of that just yet.