Analysts predict RBA will leave cash rate at 3.6% for second consecutive month

Australian borrowers face only an outside chance the Reserve Bank will lift its interest rate on Tuesday, with markets and most economists tipping the central bank will extend its pause for a second month.

The RBA board will probably leave its cash rate at 3.6% when it reveals its verdict at 2.30pm (AEST). The central bank broke its record run of 10 consecutive rate rise increases at its April meeting while indicating its job of curbing inflation may not be over.

A wildcard for the current meeting will be how the nine board members assess the impact of the faster-than-expected recovery in net migration that will expand the population by 400,000 this year.

CBA on Monday became the latest bank to revise property price forecasts. Instead of projecting national home values would drop 15% from their highs of last year, they now consider the worst to be over, with prices likely to notch a 3% average rise for this year and 5% more next year.

Westpac last week shifted its predictions from a possible rate rise on Tuesday to the RBA already reaching its peak.

Taking the past six months alone, the annualised population rate was about 2.6%, or the highest since the Australian Bureau of Statistics survey began in 1978, Hogan said.

With many of the newcomers needing rental accommodation, rents were rising at a 10 to 20% clip, depending on the city. That full impact will take time to show up in ABS data since tenants typically negotiate annually, he said.