The RBA delivered a second rate pause in a row today as inflation eases slightly, though still above the Central Bank’s target range.
The RBA noted that its official cash rate remains on hold at 4.35% as it assesses how the economy is evolving.
But it left open the possibility of a future rate rise due to the global issues potentially affecting Australia’s inflation rate.
‘While the impact of the Middle East conflict on inflation has so far been less than expected, headline inflation is still too high.
‘Trimmed mean inflation also remains elevated and is little changed from the March quarter,’ the RBA stated’ after the conclusion of its board meeting on monetary policy today.
The good news is that headline inflation fell to 3.8% for the year to June, down from 4.0% in May.
Meanwhile, the underlying rate – which strips out volatile items and is considered more of an indicator by the RBA – remained steady at 3.6% for June.
So, encouraging numbers, however, with inflation still above the RBA target range at 2-3%, it’s still reasonable to expect another rate rise is lurking.
If so, the RBA rate would hit 4.6% – the highest in nearly 15 years.
That said, HSBC chief economist Paul Bloxham reportedly expects an “extended pause”, with the RBA to start easing its rate by mid-2027.
But Westpac chief economist Luci Ellis says it is still likely that we’ll see interest rate increases this year given inflation’s current state.
‘The disruption to global oil supply is adding directly to inflation,’ noted the Central Bank after its unanimous vote.
‘And there are indications that higher fuel prices are being passed through to prices of other goods and services, so inflation is likely to remain high for some time.’
The statement underlined that inflation is still too high, and that ‘it is not expected to return to around the midpoint of the target range until late 2027’.
Yet despite the three RBA increases this year, lenders are becoming more competitive as they vie for new customers.
Canstar reports nearly 50 lenders now offer owner-occupier variable home loan rates below 6.0%.
Bendigo Bank, for example, has joined 15 lenders now offering variable rates below 5.9%.
If we see a drop in the official cash rate, 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!