Falling inflation won’t be enough to coax mortgage relief out of the Reserve Bank at its penultimate meeting of 2024, according to economists predicting another interest rates pause.

Central bankers are meeting on Monday to mull the effects of a grim anniversary for households, with the cash rate target having now stood at a decade-high 4.35 per cent for an entire year.

Families enduring the worst of what has become the sharpest spike in mortgage stress ever recorded had hoped inflation would fall fast enough to spark Christmas relief from the RBA.

But despite the headline Consumer Price Index (CPI) falling back within the RBA’s target last week, economists say central bankers are too worried about stubborn services inflation to cut.

Uniquely Australian issue

Oxford Australia head of macroeconomic forecasting Sean Langcake said services prices – including insurance, health, education and rents – are still rising too quickly for rates to fall.

“It’s not good, and it’s the part of inflation that is uniquely Australian,” Langcake explained.

All 38 economists surveyed by comparison firm Finder ahead of the RBA’s meeting expect a hold in November in what is expected to be a straightforward decision.

But this week will still be pivotal for the RBA, with analysts eyeing governor Michele Bullock’s commentary for clues about when interest rate cuts might begin in 2025.

The sooner the better for millions of households.

Finder’s tracking suggests rates of mortgage stress are sitting around record levels, with 47 per cent of home owners surveyed struggling to meet their repayments in October.

“Home owners eagerly awaiting a rate cut before Christmas will have to hold on a bit longer for some relief,” Finder’s head of consumer research Graham Cooke said.

“The good news is that 2025 will almost definitely bring multiple rate cuts.”

Interest rates guessing game

Monash University professor Mark Crosby said that while last week’s fall in inflation was “good news” the RBA will “wait longer to see that falls in inflation are entrenched”.

“A weakening economy will see rates cut sooner, but more likely in the first half of next year.”

The RBA will publish updated economic forecasts this week about when it expects underlying inflation – currently 3.5 per cent annually – to fall back within the 2 to 3 per cent target band.

That will provide a key clue about when central bankers might be willing to start cutting rates.

In August the RBA predicted that wouldn’t occur until December 2025, a position that Bullock has pointed to when pouring cold water on the prospects of mortgage relief in 2024.

Commonwealth Bank economists who last week jettisoned their prediction that rate cuts would start before Christmas, now suggests the RBA will ease at its first 2025 meeting in February.

CBA’s chief economist Gareth Aird expects some “softening” in the RBA’s language about the persistence of inflation.

“The fall in the annual rate of trimmed mean [underlying] inflation in … [the September quarter] was in line with the RBA’s forecasts,” he said.

“[That] means the board should be content to again leave policy on hold.”

Langcake doesn’t anticipate rate cuts until the June quarter though, saying core inflation is still too hot for relief before then.

The RBA is likely to start cutting rates before inflation falls back into the target band though because central bankers will be “confident we can keep tracking back to the target”.