Reserve Bank predicted to hold interest rates steady today

All eyes are on the Reserve Bank of Australia today as the board meets to make its decision on interest rates for May.

The RBA elected to pause its cycle of rate hikes last month, and there is speculation that it may repeat the move today.

That would leave the cash rate on hold at 3.6 per cent.

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The Consumer Price Index from the Australian Bureau of Statistics last week revealed that annual inflation had slowed from a 7.8 increase in the December quarter last year, to 7 per cent in the first quarter of 2023.

Monthly growth is also slowing, from 6.8 per cent in February to 6.3 per cent in March.

Nonetheless, those figures are well outside the RBA's target for inflation, and some economists have predicted it will be a close call as to whether the board continues the rate rise hiatus or not.

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Commonwealth Bank is predicting another hike, to lift the cash rate to 3.85 per cent.

If the RBA opts to increase the interest rate again, it will be the 11th hike since they began in May last year.

Another 0.25 per cent increase would see the cash rate lift to 3.85 per cent, the highest level since April 2012.

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Finance comparison website RateCity found another 0.25 per cent rate rise would mean the "average borrower" with a $500,000 loan before the hikes started could soon be paying a total of $1058 more a month.

Money.com has revealed that seven out of 10 Australians have been scared off taking out loans amid the wave of rate increases.

The RBA board is set to reveal its decision this afternoon.

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