labelCategory: RBA Cash Rate
The Reserve Bank of Australia has left the cash rate unchanged at 4.1%. This is the second consecutive month the cash rate was held.
Why Did The RBA Leave The Cash Rate Unchanged?
In his statement on the RBA’s decision, Governor Dr Philip Lowe said, “Interest rates have been increased by 4 percentage points since May last year. The higher interest rates are working to establish a more sustainable balance between supply and demand in the economy and will continue to do so. In light of this and the uncertainty surrounding the economic outlook, the board again decided to hold interest rates steady this month. This will provide further time to assess the impact of the increase in interest rates to date and the economic outlook.”
What Do Our Experts Say About The RBA’s Decision?
Home Loan Experts CEO Alan Hemmings said, “The Reserve Bank has again left the cash rate unchanged at 4.1%. This month’s decision to hold rates is off the back of continuing improvement in inflation figures in June, with inflation dropping from 5.8% to 5.4%. The decision is an indication we may be coming to the end of the increasing cycle. The Reserve Bank will, however, keep a close eye on inflation and want to see it continue to decrease. If the momentum from May and June slows or inflation starts to climb again, the board may be forced to increase rates again.
“Most industry economists are still predicting one or two more rate rises, although we are starting to see a couple say we are at the top of the cycle. For existing home loan customers, this will come as some relief; two months of rates not increasing means they are starting to have a clearer picture of what their repayments will look like longer term. For prospective buyers, it may give more certainty about how much they can borrow, depending on future inflation results.”
Does This Mean Rates Will Mean Rates Will Go Down Now?
Hemmings explained, “Given we are nearing the top of the interest rate cycle, people may ask when to expect interest rates to start coming down. Unfortunately, this is hard to predict. Whilst some economists have said the end of this year, it is more likely that we will start seeing rates decrease in the middle of 2024.”
How Does The Cash Rate Affect My Interest Rate?
Lenders add a margin to the official cash rate to determine the variable interest rate they offer to customers. So if you have a variable interest rate, it will almost certainly go up with a cash rate increase.
You can use our repayment calculator to find out what your repayments should look like.