RBA Rates Announcement Dec 2023

Following a softening of inflation figures, the RBA today delivered a festive gift to Sydneysiders by holding the official cash rate at 4.35%.

Some market experts had anticipated another 0.25% hike to help muzzle what the Central Bank had conceded were stubborn inflation figures. 

However, with annual inflation dropping to 4.9% in October from 5.6% in September, Australia’s Central Bank responded with a welcome pre-festive season pause for those mortgage paying households in Sydney. 

The RBA explained today that the limited information it received on the domestic economy since the November meeting, ‘has been broadly in line with expectations’. 

‘The monthly CPI indicator for October suggested that inflation is continuing to moderate, driven by the goods sector; the inflation update did not, however, provide much more information on services inflation. 

‘Overall, measures of inflation expectations remain consistent with the inflation target.’

Last month marked Michele Bullock’s first interest rate hike since taking on the role of RBA Governor in September. This increase broke a four-month period of pauses, taking the rate to a 12-year high. 

This rise came on the back of messaging from the RBA that suggested inflation reduction was a more stubborn challenge than previously thought. 

So, today’s announcement will please those who were bracing for a pre-festive season hike to their bank or lender rates. 

Looking ahead, Australia’s Central Bank anticipates that inflation to hover slightly below 3.0% by the end of 2025. The RBA’s target range for inflation is 2-3%.

Furthermore, in its global report, the Organisation for Economic Co-operation and Development (OECD) noted that official rate rises have likely hit their ceiling in Australia. 

With two summer months before the next announcement, it’ll be fascinating to see if spending in the economy needs another cooling hike or not. 

Some economists, such as EQ Economics’ Warren Hogan, are tipping further rate rises in 2024. Australia’s Central Bank, for its part, added its customary caveat to today’s news. 

‘Domestically, there are uncertainties regarding the lags in the effect of monetary policy,’ explained the Central Bank, ‘and how firms’ pricing decisions and wages will respond to the slower growth in the economy at a time when the labour market remains tight.’

Clearly, there could be another rise in 2024. But who knows? 

If you are considering reviewing your current arrangements, reach out to Mortgage Broker Sydney. Our friendly brokers can meet you wherever is most convenient: your home, office or local cafe. 

In addition, we are here to provide guidance on various strategies such as uncovering lower rates, enhancing savings, consolidating debts, and alleviating the impact of rising household prices.

Finally, to our valued customers in Sydney, we wish you the warmest and most joyous of festive seasons. And we look forward to seeing you again in 2024.