Early June 2024
Happy Wintertime! Have a look at my early June forecasts prepared to answer the RBA cash rate survey by finder.com.au.
Cash rate forecasts
The figure below presents the monthly cash rate series starting from January 2010, with the forecasts reported from June 2024 to May 2025 as the forecast mean and the 68% forecasting intervals.
The table below makes the numerical values presented in the figure more accessible.
| monthly | lower | upper | |
|---|---|---|---|
| Jun 2024 | 4.37 | 4.29 | 4.44 |
| Jul 2024 | 4.43 | 4.31 | 4.57 |
| Aug 2024 | 4.47 | 4.29 | 4.65 |
| Sep 2024 | 4.44 | 4.20 | 4.68 |
| Oct 2024 | 4.39 | 4.10 | 4.69 |
| Nov 2024 | 4.37 | 4.02 | 4.73 |
| Dec 2024 | 4.33 | 3.93 | 4.75 |
| Jan 2025 | 4.34 | 3.89 | 4.82 |
| Feb 2025 | 4.33 | 3.83 | 4.86 |
| Mar 2025 | 4.32 | 3.77 | 4.89 |
| Apr 2025 | 4.32 | 3.73 | 4.95 |
| May 2025 | 4.32 | 3.68 | 4.98 |
Survey answers
Based on the forecasts above, and the analysis of forecasts from individual models, I formed the following survey answers:
When you think the RBA will change the cash rate?
| Jun 2024 | Aug 2024 | Sep 2024 | Nov 2024 | Dec 2024 | Feb 2025 | Mar 2025 | May 2025 | Jul 2025 or beyond | |
|---|---|---|---|---|---|---|---|---|---|
| Increase | |||||||||
| Hold | ✓ | ✓ | |||||||
| Decrease |
Why do you think this?
Yeah, nah! It’s interesting! My forecast shows only a 60% probability of the cash rate increase in June but as much as a 75% chance in July. Additionally, the multivariate models for weekly data have the cash rate’s current level out of the forecast intervals, indicating a decisive increase. However, the pooled forecast of weekly and monthly data using multi- and uni-variate models says HOLD.
The election-year budget could generate inflationary pressure, requiring interest rate increases. However, it’s reassuring to note that the government and the RBA are in sync in their view of inflation projection and the means of reaching the target. This alignment, clearly communicated and accepted by the audience, which is reflected in my forecasts.
You can access these forecasts at https://forecasting-cash-rate.github.io/