Today, the RBA announced that the official cash rate will remain at 4.35% after the board endorsed yet another pause, though the finish line for a much-anticipated rate cut is in sight.
The RBA was the ‘mane’ attraction prior to the big race today, with the Central Bank off and running with its rates announcement 30 minutes before starters orders at Flemington.
As the RBA continues its efforts to slow what was a racing inflation rate barely 24 months ago, for those hoping for a rate cut in the near term may have to wait.
In today’s update, the central bank assessed that it does not see inflation returning ‘sustainably to the midpoint of the target until 2026’.
It added that, ‘sustainably returning inflation to target within a reasonable timeframe remains the Board’s highest priority. This is consistent with the RBA’s mandate for price stability and full employment.’
However, the RBA’s target of 2-3% for inflation as a rate has been hit, with the rate now easing to 2.8% (though underlying inflation, which reduces the effect of temporary or irregular price changes, is at 3.5%).
Interestingly, last month, seven lenders reduced their rates by an average of 0.3 percentage points, while four others implemented smaller cuts.
According to Canstar, the cheapest two-to-five year fixed rates are now just under 5.5%.
Forecasting rates, like betting on a winner at the Cup, is an uncertain pursuit.
Let’s wait and see what happens on December 10 for the final monetary policy update of the year.
‘Taking account of recent data and the updated forecasts,’ added the RBA with its customary caveat, ‘the Board’s assessment is that policy is currently restrictive and working broadly as anticipated. But there are uncertainties.’
To this point, the International Monetary Fund (IMF) has forecast that in 2025 Australia is tipped to record the second-highest inflation rate out of 42 countries.
‘The Board will continue to rely upon the data and the evolving assessment of risks to guide its decisions,’ added the RBA.
‘In doing so, it will pay close attention to developments in the global economy and financial markets, trends in domestic demand, and the outlook for inflation and the labour market.
‘The Board remains resolute in its determination to return inflation to target and will do what is necessary to achieve that outcome,’ concluded the statement.
As for home loan mortgage rates, it always pays to shop around. 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.
Marc is a Mortgage Broker based in Melbourne with nearly two decades of experience. In his 18 years mortgage broking he has helped arrange too many loans to count but he still loves his work because he loves saving people time, effort, and money.