Australians will be saved from another increase in interest rates in March, economists predict, with easing inflation and slowing growth pushing the RBA towards another pause.

Central bankers will begin a two-day rate meeting today before a decision on Tuesday that’s tipped to have the cash rate stay at 4.35 per cent – where it has been for five months.

It will spare millions of home owners a further mortgage bill squeeze amid near-record levels of mortgage stress risk and increasing rates of overdue repayments in recent months.

Economists say interest rates are unlikely to increase further, with the next move set to be down – potentially later this year or at some stage in 2025 – as inflation continues to ease.

Oxford Australia head of macroeconomic forecasting Sean Langcake said there wasn’t yet a compelling case for the Reserve Bank to change rates.

“We still have an inflation problem, but things are tracking in the right direction,” he said.

Commonwealth Bank chief economist Gareth Aird also forecast a pause, in what he called a “very straightforward decision” for central bankers in the next two days.

“The case to hike rates further is weak given economic growth is well below trend, the unemployment rate is on a firm upward trend and inflation continues to fall,” he said.

“The job, of course, is not yet done on the inflation front. But monetary policy is clearly in restrictive territory based on recent outcomes for both GDP and unemployment.

“Any further tightening from this juncture simply runs the risk of a ‘hard landing’ – something the RBA has wanted to avoid through their tightening cycle.”

With most economists predicting that interest rates have peaked, attention is turning to the timeline for a rate cut. Major forecasters are pencilling in the second half of this year.

But Langcake warned the timeline was still uncertain and it could easily take until 2025 for the RBA board to decide that lowering rates is warranted.

He said the first two quarters of 2024 would likely be the weakest for economic growth in response to higher rates, but that the economy should improve slightly from there.

“We’re kind of in a situation where really the last two quarters of last year and the first couple this year will be the low point in the cycle,” Langcake said.

Slower growth has been evident in economic data in early 2024 as consumers pull back spending amid budget pressures from high inflation and the RBA’s earlier interest rate hikes.

Commonwealth Bank’s household spending indicator fell 0.3 per cent in February, with things like household goods and food and beverage sales recording weak results.

Despite the weakening economy, Aird expected the RBA board would retain a rate hike bias in its communications this week, seeking to project seriousness about tackling inflation.

The RBA has consistently maintained rate hikes are still possible, even as inflation eases.

“Overall, we expect a very similar message from the board and governor next week on how the economy is tracking to the communication we got in February,” Aird said.

“With no board meeting scheduled in April, the RBA will have two employment reports ahead of the May meeting. And they will also be armed with the key Q1 24 inflation report.

“At this stage, we think the May board meeting is the most likely one for the RBA to jettison its hiking bias.”