Today the Reserve Bank of Australia held the official cash rate at 4.35%, though inflation concerns have dampened hopes of a Q2–3 rate cut.
Inflation data cooled hopes of a near-term rate cut, with market experts now predicting Australian home mortgage holders may have to wait till the year’s end – if at all – for a rate reduction.
Some experts are even suggesting rate rises might need to return if the current concerns over inflation aren’t addressed.
‘Recent data indicate that, while inflation is easing, it is doing so more slowly than previously expected and it remains high,’ noted the central bank today, adding that ‘the economic outlook remains ‘uncertain’ and recent data have demonstrated that ‘the process of returning inflation to target is unlikely to be smooth.
‘Recent information indicates that inflation continues to moderate but is declining more slowly than expected’.
And it was these figures that even had some market watchers tipping a rate rise today as the frustration over stubborn inflation continues to be felt in the community.
A rate rise didn’t happen, probably because of other economic data, such as the slightly worrying unemployment numbers, which jumped to 3.8% – though lower than the projected 3.9% – as 6,600 jobs were shed.
Some analysts aren’t ruling out a hike in 2024, although a pause in the rates today will come as a relief for borrowers nationwide as cost of living pressures remain intense.
As an example, data shows that 1.53 million mortgage holders in Australia were at risk of mortgage stress in March 2024.
However, relief should be on the way. The Big Four banks all agree that a rate cut is still likely in Q4, potentially bringing the cash rate down to 4.10% or even 3.85% by the time we celebrate the Melbourne Cup or Christmas.
In fact, Westpac projects that by December 2025 the official cash rate will be sitting at 3.10%.
‘Returning inflation to target (2–3%) within a reasonable timeframe remains the Board’s highest priority,’ the RBA reiterated today. ‘The Board expects that it will be some time yet before inflation is sustainably in the target range and will remain vigilant to upside risks.’
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.
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