Cash Rate Decision December 2023: RBA Leaves Cash Rate Unchanged At 4.35%

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Otto Dargan

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The Reserve Bank of Australia (RBA) has left the cash rate unchanged at 4.35% for December 2023.

Why Did The RBA Pause The Cash Rate In December 2023?

In her statement on the RBA’s decision, Governor Michele Bullock said, “The impact of the more recent rate rises, including last month’s, will continue to flow through the economy. High inflation is weighing on people’s real incomes and household consumption growth is weak, as is dwelling investment. Holding the cash rate steady at this meeting will allow time to assess the impact of the increases in interest rates on demand, inflation and the labour market.

“Returning inflation to target within a reasonable timeframe remains the Board’s priority. High inflation makes life difficult for everyone and damages the functioning of the economy. It erodes the value of savings, hurts household budgets, makes it harder for businesses to plan and invest, and worsens income inequality. And if high inflation were to become entrenched in people’s expectations, it would be much more costly to reduce later, involving even higher interest rates and a larger rise in unemployment. To date, medium-term inflation expectations have been consistent with the inflation target and it is important that this remains the case.”

What Do Our Experts Say About The RBA’s Decision?

General Manager for the Home Loan Experts Sydney Mortgage Broking Division, Bhisan Raj KC, said, “This is not a surprise, especially after the inflation data that just came out. Also, they would want people to feel relief and not do any increase before the festive season.”

Adding to Raj’s comments, Senior Mortgage Broker Jonathan Preston said, “The home finance data released yesterday was way higher than expected but it still wasn’t enough to tip the RBA. Also, the oil price continues to trend down.”

Home Loan Experts CEO Alan Hemmings cautioned that, “Whilst this is a reprieve for borrowers, it does not mean we are at the end of the increase cycle. It gives the RBA another two months to see if inflation is heading towards the 2-3% band.”

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.

About the Author

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Otto Dargan

Otto Dargan is the Founder of Home Loan Experts. He is involved in strategic and operational matters. He utilises his time in seeking... [Read More]

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