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RBA Cash Rate
The Reserve Bank of Australia has left the cash rate unchanged at 4.1%. This is the
third consecutive month the RBA has held the cash rate.
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.”
He further explained, “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 very 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?
Home Loan Experts General Manager – Mortgage Broking,
Bhisan Raj KC, “The consecutive holds by the RBA are an extended relief for many. They are probably a function of improvements in the inflation rate. This should mean sentiment in the market will be good. Consumer confidence might even go up.”
Adding to KC’s comments, Senior Mortgage Broker
Jonathan Preston said, “ This is great for sentiment, helping people feel confident that rates are, we hope, at their peak now. This benefits homeowners, who will see price appreciation in their properties. On the other hand, this is probably bad news for potential homebuyers, as the improved sentiment will increase competition; however, they at least can have more confidence that rates are not still continually going up.”
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.
