The Reserve Bank of Australia will hold its interest rate decision at 12:30 pm on Tuesday, August 6th (Beijing time). Most investment banks, including ANZ Bank, predict the Reserve Bank of Australia will maintain its interest rate this time. However, Judo Bank believes there is a possibility of raising interest rates.

Most investment banks predict the Reserve Bank of Australia will maintain its interest rate in August.

Market surveys show that the median estimated by analysts is that the Reserve Bank of Australia will maintain its interest rate at 4.35% until 2025 (the same as the results in July).

The Commonwealth Bank of Australia, National Australia Bank, ANZ Bank and Westpac Banking Corporation all predict that the Reserve Bank of Australia will maintain its interest rate at the August meeting. So, when do these banks think interest rates will fall?

The Commonwealth Bank of Australia: The interest rate will be reduced by 25 basis points at the November 2024 meeting.

ANZ Bank: The interest rate will be reduced by 25 basis points at the February 2025 meeting.

National Australia Bank: The interest rate will be reduced by 25 basis points at the May 2025 meeting.

Westpac Banking Corporation: The interest rate will be reduced by 25 basis points at the November 2024 meeting.

ANZ Bank's Chief Economist, Adam Boyton, said the weighted average inflation rate was 0.94% in the past two quarters, and the Reserve Bank of Australia is unlikely to gain enough confidence in inflation to cut interest rates this year. He pointed out that, with strong retail sales growth in May and June, combined with evidence that consumer confidence is rising, the consumer industry may have emerged from its weakest period.

Harry Murphy Cruise, an economist at Moody's Analytics, expects the Reserve Bank of Australia to maintain its interest rate at the August meeting, but believes that interest rate cuts will not occur in 'a while'. He said: 'We expect the Reserve Bank of Australia to keep its interest rate at 4.35% until February of next year.'

Bank of America predicts that the Reserve Bank of Australia will maintain its interest rate at 4.35% at this week's rate decision. Quarterly inflation data released earlier this week, prior to this meeting, showed that potential inflationary momentum has slowed, albeit slowly. Therefore, the bank predicts that the Reserve Bank of Australia will acknowledge that the current policy rate is reducing pricing pressure in the right direction.

However, slow progress towards the target may mean that interest rates remain unchanged for a period of time. The committee may also emphasize the relative weakness of the consumer sector. Bank of America predicts that the Reserve Bank of Australia's economic forecast will not undergo major changes, but may undergo minor adjustments after the release of second-quarter data. In particular, the bank expects the Reserve Bank of Australia to slightly raise its year-on-year forecast for the weighted average CPI, but it should return to the target level by 2025. Given the continued relative weakness of the consumer sector, growth assumptions are also likely to be slightly changed.

An interest rate hike in August is not entirely impossible.

It is worth noting that an interest rate hike by the Reserve Bank of Australia in August is not impossible. Warren Hogan, a well-known economist at Judo Bank, previously stated that the Reserve Bank of Australia might raise interest rates twice this year instead of once.

After the CPI data for the June quarter was released, he said the chances of an interest rate hike in August had decreased, but emphasized that 'it is not impossible to raise interest rates.'

He said: 'The basic CPI data for the second quarter shows that Australia's inflation has stopped falling and is now hovering around close to 4%, and the Reserve Bank of Australia is still concerned about the high inflation in the domestic service industry.'

Gareth Aird, chief economist of the Commonwealth Bank of Australia, said that although the bank hopes the Reserve Bank of Australia will cut interest rates before Christmas this year, it cannot completely rule out the possibility of raising interest rates in 2024.

Aird said: 'We expect interest rates to remain unchanged in August, with a very low probability of any other outcome. We also expect Reserve Bank of Australia Governor Phil Lowe to adhere to the same script at press conferences held every year since 2024. That is, the council is vigilant about the potential upward risk of inflation, while recognizing that GDP growth is weak and the outlook is uncertain.'

Market analyst Bob Mason believes that the short-term trend of the AUD/USD depends on the Reserve Bank of Australia's interest rate decision this week, as well as the US service PMI. If the Reserve Bank of Australia unexpectedly adopts a hawkish stance and the US PMI data is weak, it may support the AUD/USD to rise to 0.67. However, he warns that investors should remain vigilant because uncertainty in the global economy has affected demand for the AUD/USD.

Australian dollar against US dollar daily chart.

At 10:21 on August 5th Beijing time, the Australian dollar was quoted at 0.6499 against the US dollar.