Last month's hold was unsurprising, given the Reserve Bank (RBA) had arguably the most tumultuous month in its history in March. 

March saw an emergency second rate cut taking the cash rate to a record low 0.25%, as well as the implementation of a quantitative easing program, both for the first time ever. 

So after a total of 125 basis points in cuts since June 2019, will we see another cut or even a raise? 

A cut can almost certainly be ruled out, given the RBA has stated the cash rate has reached its floor and ruled out negative interest rates. 

"Members also agreed that the cash rate was now at its effective lower bound," the RBA said in its emergency March meeting minutes. 

"Members had no appetite for negative interest rates in Australia." 

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Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. However, the ‘Compare Home Loans’ table allows for calculations to be made on variables as selected and input by the user. Some products will be marked as promoted, featured or sponsored and may appear prominently in the tables regardless of their attributes. All products will list the LVR with the product and rate which are clearly published on the product provider’s website. Monthly repayments, once the base criteria are altered by the user, will be based on the selected products’ advertised rates and determined by the loan amount, repayment type, loan term and LVR as input by the user/you. *The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. Rates correct as of . View disclaimer.

A hike in rates also seems unlikely, given RBA Governor Philip Lowe's warning the first half of 2020 would see the biggest contraction in national output and income since the 1930s.

"National output is likely to fall by around 10% over the first half of 2020, with most of this decline taking place in the June quarter," Dr Lowe said. 

"Total hours worked in Australia are likely to decline by around 20% over the first half of this year." 

"The unemployment rate is likely to be around 10% by June, although I am hopeful that it might be lower than this if businesses are able to retain their employees on lower hours."

Westpac, NAB predict a hold

Westpac economist Bill Evans said he expected the cash rate to hold at 0.25% for at least three years. 

"We expect that the overnight cash rate is unlikely to be lifted before December 2023," Mr Evans said.

"However...that does not necessarily mean that the Bank will not adjust the bond yield target over this period." 

NAB economist Rodrigo Catril also said no surprises were expected from the RBA today.

"Having already reduced the cash rate to its self-imposed floor of 0.25% and started bond purchases (QE) with a 3-year yield target, the bank has time to assess economic and financial developments amid the pandemic," Mr Catril said. 

Although the general consensus amongst economists is a hold in the cash rate, some recent economic data may give the RBA reason to consider a hike. 

Australian Bureau of Statistics (ABS) figures released last week showed a 0.3% rise in inflation, taking annual inflation to 2.2% for the March quarter. 

It was the largest annual rise since 2014, taking annual inflation above 2% for the first time since 2018 and into the RBA's desired 2-3% band for inflation. 

Meanwhile, unemployment marginally increased in March to 5.2% from 5.1% in February, a far better result than the market prediction of a 0.3% rise. 

However, the data didn't show the full fallout from COVID-19, and Dr Lowe said the RBA expects the unemployment rate to hold above 6% for a couple of years. 

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