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RBA Rates Update June 23

21.06.23 | Marc Barlow | Reserve Bank Announcements

RBA lifts cash rate to 4.10% 


Today, the Reserve Bank of Australia announced that the official cash rate has increased to 4.10%. 


This means in just 13 helter-skelter months the official cash rate has surged by 4.0%. 


Last week’s inflation figures played a significant role in shaping today’s decision, with the annual headline inflation rate going up to 6.8% from 6.3%.


Although the underlying inflation rate decreased from 6.9% to 6.5%, it still remains considerably higher than the RBA’s preferred target range of 2-3%.


And the RBA believes more rate rises could happen, saying today that inflation was ‘still too high’ and that it would take ‘some time’ before it is back in the target range of 2-3%. 


‘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 how the economy and inflation evolve,’ said the Central Bank today. 


‘The Board remains resolute in its determination to return inflation to target and will do what is necessary to achieve that.’


These rises are particularly concerning for Australians approaching the so-called “Mortgage Cliff”. 


This term refers to a critical point where borrowers reach the end of their fixed-rate mortgage terms and transition into a variable rate or a higher fixed rate. It will undoubtedly increase the pressure on monthly mortgage payments, potentially leading to a recession later this year. 


As the RBA has emphasised this year, the window for achieving a “soft landing” in 2023 is narrow. 


It is worth noting that today’s announcement comes just a month after the federal budget was unveiled on 9 May , which aimed to address the cost of living crisis. 


While the measures received praise, some analysts expressed concerns about the potential impact on inflation due to increased spending in the budget.

The Board is still seeking to keep the economy on an even keel as inflation returns to the 2–3 per cent target range,’ added the RBA, ‘but the path to achieving a soft landing remains a narrow one.


‘The Board will continue to pay close attention to developments in the global economy, trends in household spending, 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,’ it concluded today. 


These continue to be tricky times. Yet despite the cash rate increases and inflation concerns, Australia’s housing market continues to surprise. CoreLogic’s national home value index posted a second consecutive monthly rise in April. 


The next announcement on monetary policy is 4 July. 


If you want 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 may apply fees and charges).