Few Aussies predict the Reserve Bank will lower interest rates this year as a new poll has revealed many are avoiding new loans unless necessary.
The poll, of more than 1000 people by Money.com.au, found only 15 per cent of those surveyed believe the RBA’s rate pause in April signifies rates will start to fall before the end of the year.
Ahead of the next RBA Board meeting next Tuesday, 41 per cent think rates will continue to rise over the next few months, while 37 per cent think the board will continue the pause for a least another month.
Official interest rates have risen 3.5 percentage points to 3.6 per cent since the bank started lifting rates in May last year to tame inflation.
Financial adviser Helen Baker said the RBA’s misstep in saying rates would not rise until after 2024 had left people distrustful of the institution.
“The RBA is now under a lot of pressure for their upcoming review in May,” she said.
“Because the RBA went against their promises … it is understandable that the public is confused and lacking trust in the institution.”
The survey revealed a majority of Australians were sceptical about the ability of the Reserve Bank to balance inflation and interest rates and the ability for people to make their loan repayments.
Distrust was higher in those aged 31 to 50 with 64 per cent of people believing the board will not get the balance right, compared to 58 per cent in both the 18 to 30 and over 50s cohorts.
Surveyed residents of Victoria had higher rates of doubt, with 66 per cent saying the did not trust the RBA to get it right, while Queenslanders were comparatively more trusting at 55 per cent.
Ms Baker said the survey results showed Australians were becoming more cautious with their financial decisions, with seven in 10 saying the current climate would make them less likely to apply for a loan.
“There’s no doubt a sizeable proportion of households are experiencing financial hardship in this current environment,” she said.
“I’d advise anyone in the market for a new loan to do their due diligence.”
The poll results come as the board of the Reserve Bank prepare to meet on May 2 and deliver an official cash rate announcement.
“The board expects that some further tightening of monetary policy may well be needed to ensure that inflation returns to target,” governor Philip Lowe said after the last meeting in early April.
The RBA uses interest rates to force down inflation.
On Wednesday, it was revealed Australia’s inflation rate had eased during the first three months of the year to an annual rate of seven per cent.
This, however, remains outside of the central bank’s target of 2 to 3 per cent.