Wed Sep 18 02:44:47 UTC 2024: ## Economists Predict Rate Cuts, But Households May Face More Pain First
**Sydney, Australia -** Despite the Reserve Bank of Australia (RBA) ruling out rate cuts before 2025, two leading economists are cautiously predicting up to four rate cuts in the coming year. The prediction, aligned with the ASX futures market, suggests rates could fall from 4.35% to 3.35% by the end of 2024, starting in February.
KPMG chief economist Brendan Rynne attributed the RBA’s current stance to the need for tighter monetary policy to curb inflation. However, he believes the real interest rate could become contractionary enough for cuts to begin in February. With inflation already cooling from its peak, Rynne believes multiple rate cuts are likely, providing significant relief for households struggling with the rising cost of living.
Independent economist Warren Hogan, while agreeing with the ASX prediction, warned that households may have to endure further interest rate hikes before any cuts can be implemented. Hogan highlighted that the current economic conditions do not yet warrant rate cuts, suggesting that the RBA may need to raise rates further before they can start lowering them.
Both economists agree that the real interest rate remains a crucial factor, with Australia yet to achieve a satisfactory trajectory in curbing inflation. Hogan pointed out that the current inflation event is global and requires a more aggressive response.
The news brings hope to struggling households, but the uncertainty surrounding the RBA’s next move and the possibility of further hikes leaves many facing an anxious wait for relief.
First Piper 