Any change to policy looks extremely unlikely, with the Reserve Bank (RBA) set to hold the rate at its record low of 0.25% for the sixth consecutive month. 

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Important Information and Comparison Rate Warning

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.

NAB economist Kaixin Owyong said the RBA was universally expected to keep monetary policy unchanged and call on the government to provide support to the economy. 

"In recent communications, the RBA has emphasised that it judged its package of monetary stimulus as appropriate, where cheaper borrowing rates would help support the recovery," Ms Owyong said.

"That said, the RBA stressed it remains willing to do more 'if circumstances warrant'.

"The RBA has also highlighted the important and continuing role for fiscal policy, which is best able to support the economy through the pandemic-driven collapse in demand.

"We expect the RBA to echo similar thoughts in its September post-meeting statement."

It's been five months since the RBA last changed rates, cutting the cash rate twice in March and implementing a quantitative easing program, both historic firsts. 

Recent comments from RBA Governor Phillip Lowe have suggested the central bank could take rates lower, without taking them negative which has repeatedly been ruled out. 

Dr Lowe said it could be possible to take the rate to 10 basis points by reconfiguring the current package if conditions warranted so. 

Although the official cash rate is 0.25%, the RBA's quantitative easing program has pushed down the actual rate to hover around 0.13%. 

A hike in the cash rate seems extraordinarily unlikely, as the RBA has often reaffirmed the rate wouldn't be raised unless progress towards full employment was made and inflation sits between its desired band of 2-3%. 

The most recent figures from the Australian Bureau of Statistics show Australia is experiencing deflation for only the third time in its history. 

The consumer price index plunged 1.9% in the June quarter, the biggest drop since records began 72 years ago, taking annual inflation to -0.3%. 

While unemployment increased only marginally from 7.4% to 7.5% in July, the Treasury last week forecasted the effective unemployment rate would increase to more than 13% in the September quarter.

The RBA has forecasted unemployment will remain above 7% until at least the end of 2021. 

RBA to hold fire ahead of GDP figures 

The central bank may have further reason to hold the cash rate compared to previous months ahead of the June quarter national accounts, which are likely to confirm the full fallout from COVID-19. 

NAB economists are expecting GDP to decline by 5.8%, while JPMorgan senior economist Tom Kennedy is expecting a 7.2% decline, with most other forecasts in between this band. 

The figures are expected to show the greatest quarterly fall in Australia's history, with the previous record for negative growth of 2.0% set in the June quarter of 1974. 

Mr Kennedy's forecast of a 7.2% contraction would equate to $34 billion, taking quarterly GDP back to June 2016 levels. 

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