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For immediate release: 4 July, 2016
RBA Survey: Rate cut not far off, but brace for post-Brexit hit to economy
  97% of experts in RBA survey predict no change to cash rate in July
  67% are forecasting a rate drop in August 
  More than half (52%) of respondents predict negative impact for Australia post-Brexit
4 July 2016, Sydney, Australia –  The Australian economy is bracing for the knock-on effect following the UK’s departure from the EU, but it won’t have an effect on tomorrow’s (5 July, 2016) cash rate decision, according to the latest survey by one of Australia’s biggest comparison websites1,

Thirty of 31 economists and experts (97%) in the RBA Survey are predicting the cash rate will pause at 1.75% at July's RBA board meeting, citing the federal election and Brexit vote as contributing to the RBA’s wait-and-see decision.

However, one expert, Stephen Koukoulas of Market Economics is forecasting a cash rate cut, saying, “Downside risks to the global economy has intensified to the point where a cautionary rate cut would be prudent."

Many experts believe that a rate drop is around the corner, with 67%2 forecasting this will happen in August, while 17% believe this will occur in November this year. 

This expected cash rate cut may be the last however, with the majority (59%) of economists and experts surveyed forecasting the cash rate will fall no lower than 1.50% this cycle. Seven economists (24%) predict the cash rate will fall to 1.25% before an upturn. 

Bessie Hassan, Money Expert at, says while the cash rate is expected to pause for another month, the recent result of the British EU referendum will lead to uncertainty in the Australian economy.

“Over half (52%) of experts and economists in’s RBA Survey expect it to have a negative effect of the Australian economy.

“That said, it may be too early to tell just how we will be affected. The process will take time, with negotiations likely to take more than two years. 
“When the news was announced just over a week ago there was a massive fall in stock market values and the Aussie Dollar fell, along with the British Pound. While it’s somewhat recovered, fluctuations may affect holiday plans for those travelling overseas. 

“Longer term, unemployment and consumer sentiment may be adversely affected. 

“Volatility in global markets could mean that Australian banks pay more for the capital they borrow from overseas wholesale markets. As a result, we may see banks lifting home loan rates independently of the Reserve Bank."

With almost one in four experts (23%) forecasting the cash rate to rise beyond 2016, now is a good time to conduct a financial audit, Ms Hassan says. 

"With the cash rate at a historic low right now, Australians should prioritise making extra repayments on their mortgages before a rate hike."

Eighteen percent of survey respondents thought that the post-Brexit atmosphere was more likely to encourage an Australian Republic. 

What our experts had to say in the July Reserve Bank Survey:

Shane Oliver, AMP Capital: "The RBA expressed comfort with current monetary settings after the June meeting and it's likely in wait and see mode regarding the risks posed by Brexit."

Garry Shilson-Josling, Australian Associated Press: "The RBA will most likely wait until after the CPI figures in late July, but a July 5 cut should certainly not be ruled out, After the Brexit vote and the market turmoil that has followed it the RBA could easily decide not to wait and cut at the first opportunity."

Peter Munckton, Bank of Queensland: "The RBA are comfortable with the level of interest rates."

Richard Robinson, BIS Shrapnel: "Economic and employment growth is currently strong enough to keep the unemployment rate below 6%, so there is no urgency to cut rates. There are also lingering concerns any cut will again bolster house prices."

Chris Caton, BT Financial Group: "There's another cut out there, and July can't be ruled out, but the RBA would probably prefer to wait for more evidence on inflation."

Michael Blythe, CBA: "RBA is waiting for next CPI reading before deciding on rates."

Savanth Sebastian, CommSec: "RBA will want to look through the current share market volatility and also wait on the June quarter CPI result."

Dr Andrew Wilson, Domain Group: "Waiting for June qtr CPI data."

Scott Morgan, Greater Bank: "There is nothing in the recently released data to suggest further cuts are needed at this stage. There is no need for a knee jerk response to Brexit or other issues. I think the RBA will want the election to be out of the way and some time to look at how the economy and markets are responding to the previous cut."

Mark Brimble, Griffith University: "Given the frenzy of speculation, action and reaction re the Brexit the RBA will be reluctant to muddy the waters this month and will want to see how this plays out. Bias remains to easing further however."

Atul Narang, HashChing Pty Ltd: "RBA might hold the cash rate considering Australia's seasonally adjusted unemployment rate stood at 5.7 percent in May 2016, unchanged from the previous two months. Having said that, Brexit might have an impact on the interest rates in the near future if US Federal Reserve delay the rate hike which would keep the Australian dollar higher than the RBA would like. This might force RBA to cut interest rates again to stimulate the economy and to lower the Australian dollar. So we might see an interest rate cut in the next RBA meeting. Though this is a good time for consumers to shop around for great home loan deals and demand a rate cut from their lender."

Peter Haller, Heritage Bank: "The RBA's focus is on the domestic economy. There has been no data releases in the last several weeks to  materially change the bank's neutral tone from its June meeting."

Jason Spencer, "There is no significant weakening in the Australian economy to justify a drop at this time."

Paul Bloxham, HSBC: "Waiting for the Q2 CPI."

Saul Eslake, Independent Economist: "Outlook for Australian economy hasn't changed materially since last meeting; Brexit vote does cast a shadow, but it is too early to tell whether that shadow will last long enough and be dark enough to warrant a monetary policy response. RBA likely to wait for June qtr CPI before reconsidering."

Stephen Koukoulas, Market Economics: "Downside risks to the global economy has intensified to the point where a cautionary rate cut would be prudent."

John Caelli, ME: "The full extent of Brexit’s impact has yet to be played out. We expect the RBA will assess the next CPI figures due late July before considering any further rate cuts in August."

Mark Crosby, Melbourne Business School: "The RBA decision will be made at the last minute based on global market volatility in the few days leading up to the decision. As of Wednesday before the decision markets seem to have stabilised, warranting a hold decision. The Brexit vote that is causing financial market volatility should ultimately have little to no impact on our economy, and therefore should not affect the rate decision unless global financial markets crash."

Emily Dabbs, Moody's Analytics: "Monthly indicators suggest the economy continues to perform well. The impact of Brexit on Australian markets is relatively minor. The central bank will wait until the CPI data release to assess inflation pressures. "

Jessica Darnbrough, Mortgage Choice: "I think the Reserve Bank will wait and see what the true impact of the Brexit result will be before making any decisions on the future of the official cash rate. In addition, they may want to wait and see what the next round of inflation data reveals before reducing the cash rate further. "

Ken Sayer, Mortgage House: "Too much uncertainty."

Christopher Schade, MyState Bank: "The RBA will take further time to see how the economy is tracking before making a further change to the cash rate. Whilst risks are to the downside, a hold is more likely in July, with the August meeting following the next CPI read looking particularly interesting."

Jonathan Chancellor, Property Observer: "They are still content to watch their last cut play out."

Matthew Peter, QIC: "While BREXIT makes for a more compelling case to cut rates, the RBA will not want to give the impression of knee jerk reaction. The RBA will wait to August allowing it to prepare markets for a renewal of the easing cycle, particularly if the July inflation read remains weak."

Noel Whittaker, QUT: "Wait and see."

Angus Raine, Raine & Horne: "A wait and see due to Britain's exit from EU and federal election.”

Nathan Mcmullen, RAMS: "RBA likely to review Q2 inflation data due late July before revisiting changes to the cash rate."

Janu Chan, St.George Bank: "RBA has provided little guidance on rates and little indication that it will lower them any time soon. While that was before the Brexit vote and downside risks to the global economy have increased, this isn't likely to be enough for the RBA to cut as soon as next week, particularly ahead of inflation data later in July."

Nicki Hutley, Urbis: "No strong reason to move rates in either direction at present."
1 Experian Hitwise since 2013
2 Of the 30 experts who opted into this question
For further information:
Bessie Hassan
Head of PR Australia
& Money Expert
+61402 567 568
+61 1300 FINDER (346 337)
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