RBA Rates Announcement August 2023

01.08.23 | Michael Brown | News

The RBA had encouraging news for Sydney home mortgage holders with the official cash rate remaining on hold at 4.10% for a second consecutive month.

With last week’s figures showing inflation appearing to have plateaued, today’s decision was expected by many commentators.

The consumer price index (CPI) grew by just 0.8% in the June quarter, which on a 12-month basis saw the inflation rate grow by 6.0%, dropping from 7.0% the previous quarter.

And with consumer spending flattening, these figures were likely factors in today’s decision.

‘Inflation in Australia is declining but is still too high at 6 per cent,’ the RBA said today. ‘The central forecast is for CPI inflation to continue to decline, to be around 3¼ per cent by the end of 2024 and to be back within the 2–3 per cent target range in late 2025.

However, with inflation still well above the target range of 2-3%, some analysts believe there still could be another rate rise this year amid the RBA’s fears of ‘entrenched’ inflation.

‘Some further tightening of monetary policy may be required to ensure that inflation returns to target in a reasonable timeframe, but that will depend upon the data and the evolving assessment of risks.’

Today’s Board decision suggests that the RBA’s hikes may finally be yielding their desired effect.

And it will come as a relief for many mortgage holders who have been struggling with the soaring cost of living, higher variable rates or fixed rates. Research by Canstar shows that Aussie mortgage holders are working for at least 18 days in order to pay their monthly repayments.

As an example of how much loans have shot up, data shows that none of the big four banks now offer fixed rates below 6.0%. Additionally, research from Roy Morgan reveals that the number of Australians facing potential mortgage stress has reached its highest level since the Global Financial Crisis.

Navigating this set of circumstances will be the RBA’s new governor, Michelle Bullock, who is set to take charge next month as Dr Philip Lowe’s tenure comes to an end.

‘The recent data are consistent with inflation returning to the 2–3 per cent target range over the forecast horizon,’ noted the RBA, adding that returning inflation to target within a reasonable timeframe ‘remains the Board’s priority’.

And, good news for Sydney home owners with the latest data showing prices in the Harbour City are rising higher than anywhere in the country.

If rates have you concerned, 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.