When will the RBA start cutting interest rates?

At the Reserve Bank of Australia 's first media conference last week, a Reuters journalist asked Governor Michele Bullock: "On the scale of 1 to 10, how confident are you currently inflation is moving sustainably back to target range?"

Her answer? "Five."

This neutral stance defined the press conference, with Bullock not ruling out the possibility of a further rate rise . However, economists and market analysts are convinced rate cuts are coming . Here's what experts on LinkedIn have to say about where the cash rate is headed.

Luci Ellis, Westpac Chief Economist

Ellis says the RBA is not completely ruling out a further rate hike because there are concerns that services inflation — such as the price of haircuts and dentist visits — can stay higher for longer.

However, Ellis doesn't believe there will be a rate hike from here.

"Over time, as inflation continues to fall, the labour market eases and consumer spending remains soft, we expect the RBA will start to have enough comfort and enough reassurance they will see inflation return to their 2% to 3% target band on the timetable they want to see."

Her forecast is that "level of comfort" will be reached around September this year, which would lead to a couple of rate cuts towards the end of this year.

Watch Ellis' outlook on the RBA's interest rate decisions here .

Josh Gilbert, eToro Market Analyst

Gilbert agrees we should take the RBA's warning on the possibility of a rate hike with a large grain of salt. "Really, the board has clearly finished raising interest rates," he writes on LinkedIn.

"Ostensibly, Bullock has learnt from Lowe’s prior mistake of overpromising future economic stability. The RBA will keep this tightening rhetoric and push back on market pricing for now because if they give an inch, the market will take a mile."

However, Gilbert notes Bullock's statement, alongside Jerome Powell's pushback on Federal Reserve cuts , has dramatically changed the market expectations of a rate cut.

Prior to her statement, markets were forecasting almost three cuts in 2024.

Now, the market is counting on the first rate cut by August, followed by a second cut by December.

Read Gilbert's analysis on Governor Michele Bullock's first press conference here .

Saul Eslake, independent economist

Eslake says interest rates will be slower to come down in Australia than in comparable economies including the US, Europe, the UK, Canada and New Zealand because, "[their] central banks have tightened monetary policy sooner, and more aggressively, than the RBA."

The RBA doesn't expect inflation to come down to the mid-point of the 2% to 3% target range until mid-2026.

He says the stage three tax cuts — which begin on July 1 — will also act as an additional deterrent for the RBA to deliver rate cuts. Eslake estimates the tax cuts equal around two 0.25% rate cuts (0.5% in total).

"It's hard to see the RBA needing to 'double up' on them," he says.

Read Eslake's take on the post-meeting statement here .

What is your outlook on interest rates in 2024? Share your insights in the comments below.

Top finance conversations on LinkedIn

?? Five years on, banking leaders are reflecting on how the Hayne banking royal commission shaped the industry. 澳新银行 CEO Shayne Elliott says the inquiry forced the bank to examine in "excruciating detail" where its conduct fell of community standards. Read more .

?? Accountant salary booms are over — that's according to the latest survey from Chartered Accountants Australia and New Zealand , which found full-time employees got a median wage rise of just 3%, down from a double-digit pay rise in 2022. Here are the details .

?? Liked this edition of the Finance Wrap-Up newsletter? Subscribe to our newsletter to discover more finance voices on LinkedIn .