RBA final meeting of 2024: What to expect on Tuesday

The interest rate shackles on many businesses, keeping economic growth in the doldrums, will surely be a central talking point for the Reserve Bank at its final monetary board meeting for the year.

The RBA board will meet on Tuesday and announce the final cash rate decision for 2024 later in the day.

The Australian sharemarket is forecasting a 91 per cent chance the cash rate stays at 4.35 per cent – where it has been since December last year.

Only 9 per cent of traders think a cut to 4.1 per cent will be made on Tuesday.

A few of the outliers betting on a cut were warned off in the final week of November, as data showed mineral exploration spendinghad fallen 4 per cent.

Inflation staying steady at 2.1 per cent in October – the lowest annual inflation since July 2021 – was not enough for the share market to hold out hope of easing, as the chance of a cut slipped to just 3 per cent at the end of last month.

There are seemingly too few workers to fill jobs in the wider economy for the Reserve Bank to pull the trigger on a cut just yet. Australian businesses can’t make or sell enough products or provide enough services to grow and increase wages, so the argument goes.

In lock-step with this stagnation, non-discretionary household spending remains at a three-year low. In last month’s minutes,the RBA board pointed to total demand for goods and services still exceeding supply.

“But the gap between demand and supply is narrowing and inflation is coming down slowly,” the board said.

And while government power bill rebates and public sector job pay increases have kept the economy above water, the private sector has been hit hardest by the ongoing high interest rates.

The economy grew a marginal 0.3 per cent last quarter, chalking up a seventh-straight quarter of per-capita recession. That backwards slide means Australians are $4310 poorer than when they were 21 months ago.