The Reserve Bank has held the official cash rate at 4.35%, though Australia is on track for a cut, say experts, in the next few months.
There were no winners today in the new ‘race that stops a nation’: the RBA Interest Rate Stakes. But while today’s horseracing margin was a short half head, it looks like odds are quietly firming for a rate cut soon.
‘The November SMP forecasts suggest that it will be some time yet before inflation is sustainably in the target range and approaching the midpoint,’ said the RBA today.
‘This reinforces the need to remain vigilant to upside risks to inflation and the Board is not ruling anything in or out.
Crucially, too, the central bank does not see inflation returning ‘sustainably to the midpoint of the target until 2026’.
‘Policy will need to be sufficiently restrictive until the Board is confident that inflation is moving sustainably towards the target range,’ added the Central Bank.
As noted by rating agency Morningstar, “the last mile of the inflation battle is the hardest”.
Melbourne Cup puns aside (well, mostly), the finish line for a long-anticipated rate cut is coming into view as the RBA races to bring inflation sustainably back to target.
We’re not in the fortune-telling business or we’d have backed Knight’s Choice for the race, but there’s a sense that the lenders are preparing for a rate cut. Last month, seven lenders reduced their rates by an average of 0.3 percentage points.
In fact, according to Canstar, the lowest two-to-five year fixed rates are now just under 5.5%.
With some forecasts suggesting a potential drop in the official cash rate to around 3.6% by late 2025, it’s a good time for Melbourne homeowners to shop around when reviewing their mortgage options.
Adding further fuel to the rate-cut speculation was that the RBA’s target inflation range of 2-3% was recently achieved, with inflation easing to 2.8% in the CPI figures released last week.
However, Australia’s Central Bank also warns that inflation is a volatile metric, and can easily move out of the preferred target band.
Furthermore, underlying inflation, which reduces the effect of temporary or irregular price changes, sits outside the target band right now at 3.5%.
‘Sustainably returning inflation to target within a reasonable timeframe remains the Board’s highest priority.
‘This is consistent with the RBA’s mandate for price stability and full employment,’ reiterated today’s statement.
Will the RBA deliver a Christmas gift in the form of a first official rate cut in four years?
Most analysts believe we’ll have to wait a little longer, with February 2025 a hot tip for those who like a flutter on the rates and not the nags.
Either way, we’ll find out on December 10 for the final monetary policy update of 2024.
If you would like to review your home loan arrangements, 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!