labelCategory: RBA Cash Rate
The Reserve Bank of Australia has left the cash rate unchanged at 4.1%. This is the fourth consecutive month the RBA has held the cash rate.
Why Did The RBA Leave The Cash Rate Unchanged?
In her statement on the RBA’s decision, Governor Michele Bullock 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 decided to leave the cash rate on hold at 4.1%, the fourth month in a row that the cash rate has not changed. The decision was not unexpected. Most lender economists predicted the Reserve Bank would maintain the status quo, even with the August figures showing an increase in inflation.”
He further explained, “The Reserve Bank is very much taking a watching brief; if we see another month of inflation increasing, then the Reserve Bank may look to raise the cash rate. But most economists believe we may be at the top of the interest-rate cycle (with maybe one more increase if required) and that interest rates will remain static for a period. They also believe the Reserve Bank will be very conservative in managing an interest-rate reduction, as there are still inflation concerns, nor does the RBA want to overheat the property market.”
So what does this mean for you?
Hemmings explained, “For customers, another month of no increases will come as further relief from having to review living expenses to ensure they can make increased home loan repayments. For existing customers with a fixed rate coming to an end, or those who are unsure whether their current variable interest rate is competitive, speaking to a broker is important. For prospective buyers, likewise, a broker can provide some certainty on how much they can afford. Speaking to a broker is also key for maximising borrowing potential.”
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.