RBA reduces rate with unanimous third cut in 2025
On the back of encouraging inflation figures, the RBA dropped the official cash rate by 0.25% to 3.60% today.
With inflation nestled comfortably in the RBA’s 2–3% target range, a cut was very much on the cards.
The Central Bank made note of the fact that today’s decision was unanimous, adding that, ‘with underlying inflation continuing to decline back towards the midpoint of the 2–3 per cent range and labour market conditions easing slightly, as expected, the Board judged that a further easing of monetary policy was appropriate.’
However, the Central Bank did say that ‘uncertainty’ in the world economy remains elevated.
That said, inflation fell to 2.1%, down from 2.4% in the last quarter. Likewise, trimmed mean inflation – which excludes extreme price changes – is now at 2.7%, down from 2.9%.
Together with a sluggish GDP, today’s drop was very much needed, say market watchers, to stimulate spending across the economy.
However, some analysts believe a cut should have been delivered last month rather than a pause (reportedly three of the nine RBA board members voted for a July cut).
No doubt today’s news will ramp up competition again in the home loan mortgage borrowing space.
In fact, a slew of banks and lenders dropped their rates last week in anticipation of today’s cut (not ANZ though, who raised rates on its ANZ Plus variable loan – underlining the importance for you to shop around).
So, how much could borrowers nationally save on their monthly home loan repayments after today’s news?
On an average loan of around $600,000, a lender cut of 0.25% will take about $90 off a month. A $1 million mortgage would see borrowers’ minimum monthly repayments drop by around $150.
But the RBA remains cautious, as always. ‘The Board will be attentive to the data and the evolving assessment of risks to guide its decisions.
‘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 RBA’s next monetary policy update is 30 September.
Experts predict another cut or two should be delivered over the next six to nine months.
‘Should’ is the operative word – the RBA often takes a cautious view, as we know.
If you would like to review your home loan arrangements, contact Mortgage Broker Group.
We can assist with tips on how to uncover lower rates, boost your savings, consolidate other debts, and take the pressure off increases in household prices.
Mortgage Broker Group operates nationwide, and our service is 100% free to you (although your lender will likely apply their normal fees and charges to any loan you take out).