The decision by the Reserve Bank of Australia (RBA) to keep the cash rate on hold at 4.1 percent in April comes as no surprise but pressure is now building for a cut in May.
The Real Estate Institute of Queensland (REIQ) has acknowledged the RBA to be waiting for the release of the comprehensive March quarter CPI inflation data on 30 April.
REIQ CEO Antonia Mercorella said it was widely expected that the RBA would hold in April, and it would have been a surprise if it had cut the cash rate.
However, hopes are mounting for May’s decision.
Following the release of the Federal Budget, Treasury has now forecast underlying inflation, excluding the impact of fuel and energy rebates, will reach the RBA’s target band of two to three percent by the middle of the year.
According to the monthly CPI data, annual inflation to February 2025 was 2.4 percent and the core inflation measure (the trimmed mean) came in at 2.7 percent.
“After holding in April to gain more confidence inflation is under control, many home buying hopefuls and mortgage holders will be hoping the RBA will consider an additional cut to the cash rate in May,” Ms Mercorella said.
“The latest monthly inflation data confirms that inflation is back in the RBA’s target band, which is encouraging news for consumers and businesses alike.
“Households would welcome additional relief after suffering a significant fall in real disposable income over the last two years.
“There have been signs of sluggishness in the private sector economy, and a rate cut would help improve the outlook for businesses.
“Additional rate cuts are required to lift consumer confidence and borrowing capacity. They also stimulate additional demand and construction of new housing which is sorely needed.”
Ms Mercorella said housing approvals data – regarded as the home building pipeline – suggest Queensland and Australia will fall short of national housing targets.
Over the 12 months to the end of January 2025, about 35,800 dwellings were approved for construction in Queensland.
“This is well below the approximately 49,300 dwellings Queensland needs to build each year to do our fair share to meet the national housing target of 1.2 million new homes over five years,” she said.
Managing Director of Market Economics managing director Stephen Koukoulas believes the case for an interest rate cut is overwhelming.
Annual inflation dropped to 2.4 percent in the year to February, making it seven consecutive months that inflation has been in the two to three percent target.
