Fears of another interest rate hike are unlikely to materialise at the August cash rate meeting following as-expected inflation numbers, with another hold the widely expected outcome. 

Yet mortgage-holders hoping for interest rate cuts have a while to wait, economists say, and should not expect firm indication of where the central bank plans to go next at Tuesday’s meeting.

Higher interest rates, jacked up by the Reserve Bank of Australia to tame inflation, are already weighing heavily on mortgage-holders, small businesses, first-home buyers and the economy as a whole.

A couple earning a combined $184,060, who maxed out their borrowing capacity to buy a home before rates starting going up, could now be putting nearly 44 per cent of their before-tax income towards repayments.

The modelling by comparison website Canstar suggests another hike would nudge that figure higher to 45 per cent, leaving very little leftover to cover living costs.

The Australian Council of Social Service has called on the RBA to start cutting interest rates, with the balance of risks swinging towards a surge in unemployment and recession.

Worries of a recession in the United States further added to the narrative of a global economy cooling in response to higher interest rates.

Yet inflation remains above the RBA’s two per cent to three per cent target range and has been accelerating, rising from 3.6 per cent annually in the March quarter to 3.8 per cent in June.

Still, economists were broadly of the view the June quarter inflation data were not strong enough to warrant another hike.

Four in five economists and experts surveyed by Finder anticipated the cash rate staying unchanged at 4.35 per cent in August.

Most forecasters now expect the next move to be down but views differ on the timing.

Of the major banks, Commonwealth Bank and Westpac were predicting a November start, ANZ in February 2025 and National Australia Bank a May commencement for easing.

On the timing of cuts, ANZ head of Australian economics Adam Boyton said the RBA was unlikely to give any hints, instead sticking with its “not ruling anything in or out” line on future moves.

Tuesday’s decision will be accompanied with refreshed economic forecasts from the RBA.

Mr Boyton expected “large revisions” to headline inflation to reflect energy rebates and other government policies, which would see price forecasts lowered and then lifted again as the supports expired.

This post was originally published on Michael West.