No surprises at April RBA meeting, but experts suggest rate hike is nearing

The official cash rate will remain at a record low for at least another month following the Reserve Bank's decision to keep rates steady at 0.10% at its April board meeting this afternoon.

In his post-meeting monetary policy statement, RBA Governor Philip Lowe suggested that the board would need to wait for more evidence around inflation and labour costs before pulling the rate rise lever though.

"The Board has wanted to see actual evidence that inflation is sustainably within the 2-3% target range before it increases interest rates. Inflation has picked up and a further increase is expected, but growth in labour costs has been below rates that are likely to be consistent with inflation being sustainably at target.

"Over coming months, important additional evidence will be available to the Board on both inflation and the evolution of labour costs. The Board will assess this and other incoming information as its sets policy to support full employment in Australia and inflation outcomes consistent with the target."

While the RBA's April decision means that the cash rate has now gone unchanged for 17 months, there is certainly plenty of speculation that it won't stay that way for long.

In comments made as part of the latest Finder RBA Cash Rate Survey, AMP's chief economist Shane Oliver said that the conditions for a Reserve Bank rate hike could align in as little as two months.

"The RBA's objective of full employment has been reached, wages growth is picking up and inflation is pushing well above target with a rising risk that inflation expectations will start to rise in which case it will become self-feeding, and the Budget will add in more stimulus this year. So the conditions for a rate hike will be in place by June."

Meanwhile, Bendigo Bank's head of economic and markets research, David Robertson, anticipates a number of rate increases over the next year.

"The RBA are set to increase the cash rate by August, and potentially as soon as June if CPI data released next month exceeds their forecasts. The tightening cycle should pause next year at around 1.5% (lower than market expectations) and falling unemployment will help to soften the blow from higher rates."

Oliver and Robertson were not alone in their sentiment either, as the overwhelming majority (88%) of economists and experts surveyed by Finder expect there to be at least one rate increase before the end of the year.

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