There was no consecutive rate cut today with the RBA’s official cash rate remaining paused at 4.10% – though global uncertainty is clouding the interest rate picture this year.
Following February’s major news of a first rate cut since 2020, Australia’s Central Bank said after today’s board meeting that caution was important right now.
‘Inflation has fallen substantially since the peak in 2022.
‘Nevertheless, the Board needs to be confident that this progress will continue so that inflation returns to the midpoint of the target band on a sustainable basis.
‘It is therefore cautious about the outlook,’ the RBA noted today.
To recap, two months ago, the RBA cut the official cash rate by 0.25%.
This was its first reduction after more than a year of stability at 4.35%, and the first drop since pandemic measures were in place in 2020.
Currently, headline inflation is 2.4%, a slight decrease, while the “trimmed mean” – the RBA’s preferred measure – dropped 0.1% to 2.7%.
This means inflation is comfortably within the RBA’s 2-3% target range – fueling talk of further cuts this year.
Just not today. Many market watchers are already predicting another drop in May just after the federal election. That’ll be nice news for whoever wins at the ballot box.
Some analysts believe that the cash rate will fall to around 3.35% by the end of 2025, though predict at your peril in this volatile world.
Confidence is returning, though. In March, the Westpac-Melbourne Institute Consumer Sentiment Index rose 4%, climbing from 92.2 in February to 95.9.
That said, the RBA is mindful of what’s happening globally.
‘Recent announcements from the United States on tariffs are having an impact on confidence globally and this would likely be amplified if the scope of tariffs widens, or other countries take retaliatory measures.
‘Geopolitical uncertainties are also pronounced. Inflation, however, could move in either direction.
‘Many central banks have eased monetary policy since the start of the year, but they have become increasingly attentive to the evolving risks,’ it concluded.
After February’s rate cut, not all lenders passed on the good news to their customers. Did yours? And are you getting the best deal for your circumstances?
If you would like to review your mortgage rate, contact Mortgage Broker Melbourne.
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You can find out more in our recently published article on preparing for a rate cut.
Additionally, we can offer you tips on how to uncover lower rates, boost your savings, consolidate other debts, and take the pressure off increases in household costs.
Marc has been a professional lender for 28 years. After beginning his career in 1990 with a UK Building Society, he moved to Australia where he held several different retail banking roles. In 1999 it became clear to him that a mortgage broker would eventually become an obvious choice for someone looking for a home loan so he took the plunge and became an independent broker. He hasn’t looked back since!