There was no Cup boost for Melbourne’s home loan mortgage holders today, as the RBA held the official cash rate at 3.60% while it monitors racing inflation.
With inflation bolting in last week’s quarterly data, few were surprised by today’s news released just before the running of the ‘race that stops a nation’ at Flemington.
‘The Board’s judgement is that some of the increase in underlying inflation in the September quarter was due to temporary factors,’ the RBA said today.
‘The central forecast in the November Statement on Monetary Policy, which is based on a technical assumption of one more rate cut in 2026, has underlying inflation rising above 3 per cent in coming quarters before settling at 2.6 per cent in 2027.’
While Half Yours won the big race, banks won’t be halving anything when it comes to taking their punters’ interest payments. It’s all theirs! But at least there’s no extra weight in Melburnians’ repayments saddle.
However, the RBA’s slight concern centres on September’s jump in the quarterly inflation figures.
Annual inflation came in at a rather high 3.2% – above the RBA’s target band of 2-3% – after prices rose 1.3% for the quarter.
More notably, the RBA’s preferred gauge – the trimmed mean measure of core inflation which strips out volatile items – climbed 1.0%, lifting the annual rate from 2.7 to 3.0%
The good news for borrowers is that the monetary policy boffins in Sydney view this spike as temporary – driven mainly by higher electricity costs – rather than a sign that rates need to rise in the short-term.
And most analysts agree, expecting the RBA to avoid any knee-jerk decision and stay the course by holding rates steady again next month (though some experts believe the economy needs a kickstart with a cut).
To recap, we’ve seen three 0.25% cuts earlier in 2025. Next year, however, could prove a different story.
CBA economist Belinda Allen has cautioned the RBA may need to lift rates again by mid-2026.
But Oxford Economics Australia still expects a couple of cuts next year, which would take the cash rate back to a ‘neutral’ level of 3.10%.
As we say, it’s a fool’s game predicting rates.
Meanwhile, the RBA cautioned that ‘the recent data on inflation suggest that some inflationary pressure may remain in the economy’.
But added an optimistic note in relation to global factors, noting that uncertainty in the global economy ‘remains elevated but so far there has been minimal impact on overall growth and trade.’
Should we see another drop from the RBA, you can find out more in our recently published article on preparing for a rate cut.
If you would like to review your mortgage rate, contact Mortgage Broker Melbourne. We are one of the most positively reviewed mortgage brokers in Melbourne.
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!