"However, I expect it will find that while inflation may temporarily overshoot its target and growth will undershoot. Along with falling real estate prices, this will motivate the Reserve Bank to cut rates, as the gap between reality and its models becomes harder to avoid." John Edwards captured plenty of headlines with his prediction. Credit:Graham Tidy The Reserve Bank has kept rates on hold at the historic low of 1.5 per cent for 10 consecutive months thank to meagre gross domestic product growth, anaemic wages and soft construction, despite surprisingly strong retail sales figures. Market economics consultant Stephen Koukoulas said with the economy still sluggish and unemployment on track to rise to 6 per cent, monetary policy stimulus from the Reserve Bank would be necessary. "Adding to the case for easier monetary policy is a troubling over-valuation of the Australian dollar which is now crimping non-mining exporters and many local firms," he said.

Industry Super chief economist Stephen Anthony said the central bank could move to cut rates "if for no other reason then to provide relief for households in the face of rate increases by big four banks". St George Bank economist Besa Deda says Reserve Bank won't risk another rate cut. Credit:Quentin Jones But 16 other economists surveyed by Fairfax Media have been more cautious in their outlook, predicting rates are likely to remain on hold until 2019. St George chief economist Besa Deda said the central bank's hands were tied by rising household debt and concerns about sparking another house price rise. Her comments come despite measures taken by the banking regulator, the Australian Prudential Regulation Authority, to limit risky investor lending.

The restrictions have partly helped to pull house prices back for the first time in 18 months, according to property researcher Core Logic. "But the RBA cannot risk adding fuel to the fire," said Ms Deda. "There are some tentative signs that housing conditions have started to cool, but the full effects of APRA's recent measures are yet to be fully felt." On Wednesday, former Reserve Bank board member John Edwards said it was "distinctly possible" the bank could increase interest rates eight times in the next two years if its current forecasts of 3 per cent growth and 2.5 per cent inflation prove correct. Only one economist, the University of Melbourne's Neville Norman followed Edward's path, jotting down a cash rate of 2.25 per cent by June 2018. But four others pencilled in more modest rises as Canada's central bank boss Stephen Poloz shocked investors by signalling a rate rise could be on the cards as soon as July.