What’s the chance of an interest rate cut when the Reserve Bank finishes its meeting on Tuesday?

Extremely low or even zero, according to economists, who say central bankers will keep rates on ice in September and probably for the remainder of the year as inflation proves stubborn.

The cash rate target has now been on hold at 4.35 per cent since November and as other nations – including the United States – begin cutting rates, attention is turning to the RBA.

But Oxford Australia head of macroeconomic forecasting Sean Langcake says the Australian economy is on its own trajectory and the RBA doesn’t see the case to begin rate cuts this year.

He said there’s “no chance” of a September cut and predicted easing won’t start until the second quarter of next year, suggesting that mortgage bill relief is still more than six months away.

“The governor was very clear with us all at the last press conference saying there’s no case for a rate cut this year if things pan out the way they think it will,” Langcake said.

“The data we’ve had since then confirms all that.”

A Finder survey of economists before the September RBA meeting revealed a unanimous prediction that rates will remain on ice, with 44 per cent predicting the first cut in February.

Some predictions are slightly more optimistic for home owners struggling with high mortgage repayments, with Commonwealth Bank anticipating rate cuts to begin from November.

But the weight of expert opinion has clearly shifted towards an easing in 2025 after RBA governor Michele Bullock said at the bank’s last meeting that hopes for a cut were overblown.

IFM Investors’ Alex Joiner said the data doesn’t justify easing the interest rate target this year, with underlying inflation running at 3.9 per cent over the June quarter, well above RBA targets.

“We expect that it will take further time for the RBA to be confident in inflation and once it has that it will look to support the economy and labour market,” he said.

Macquarie University professor Geoffrey Kingston said there have been “mixed signals” from the economy over the past month, with inflation being propped up by “high public sector spending”.

“On the other hand, the private sector continued to weaken. [The Reserve] Bank is almost certain to remain in a holding pattern,” he said.

Central bankers are still forecasting inflation to fall back into the 2 to 3 per cent target late next year and to the midpoint of the band in 2026.

That contrasts Treasury predictions that price growth will ease to 2.75 per cent in late 2024.

Langcake explained that headline inflation will fall faster than underlying inflation over the second half of 2024 largely because of huge utility bill subsidies announced in the last federal budget.

But the RBA will “look through” those subsidies because when they expire inflation will increase again next year, with central bankers instead focusing on how underlying inflation rates change.

“Their [the RBA’s] forecasts aren’t terribly optimistic. They allow for a very long time for inflation to run above target,” Langcake said.

“They are achievable, and we are on that track.”