Live Updates RBA Cash Rate Announcement What it means for mortgage holders

We regularly update this live post with the latest RBA cash rate announcement and home loan interest rate news. Be sure to add this page to your favourites so you can stay up-to-date. 
Information is current as of February 2024.

The Reserve Bank of Australia (RBA) held the cash rate at 4.35% on Tuesday, February 6, 2024. 
This is the highest the cash rate has been in 11 years. 

What’s the RBA?


RBA stands for Reserve Bank of Australia. It’s Australia’s central bank and banknote issuing authority. 

The RBA dictates the cash rate, which influences interest rates to ensure Australia’s economic growth is controlled.

The RBA board meets eight times per year. During this meeting, they decide whether to hold, raise or lower the cash rate. This decision depends on several factors including the performance of the Australian dollar, the state of the housing market and inflation.

 

What does the term ‘cash rate’ mean?


The cash rate is kind of like a benchmark. It’s also sometimes known as the bank rate or the base interest rate. It serves as a benchmark for everything from mortgages to savings accounts and the exchange rate.

So what does the RBA cash rate rise mean for you? 

Well, if you have a home loan, a cash rate increase could have a significant impact on your wallet. Depending on your loan type, if your bank decides to pass the rate increase on to borrowers, your repayments will increase.

A mortgage broker can potentially help you reduce the impact of a rate rise on your mortgage repayments, by helping you find a better deal.

 

Why did the RBA hold the cash rate?

 

The RBA is using cash rate rises as a mechanism to control inflation. The RBA’s target rate of inflation is 2-3%.

The latest data on the Consumer Price Index (CPI) from the Australian Bureau of Statistics (ABS) showed there was a rise of 0.6% in the December 2023 quarter. This is down from 1.2% in the September quarter. The annual rate of inflation is 4.1%.
 

Although the rate of inflation is above the target range, it is slowing. The rate of inflation is lower than predicted.

The RBA may have perceived this easing in the rate of inflation as a sign that previous rate hikes were effective and then determined that a further immediate rate hike was not necessary.

 

Will the RBA raise the cash rate again?


RBA Governor Michele Bullock stated that the RBA remains committed to the target inflation range of 2-3% and has not ‘ruled out’ further rate increases.

The path of interest rates that will best ensure that inflation returns to target in a reasonable time frame will depend upon the data and the evolving assessment of risks, and a further increase in interest rates cannot be ruled out.”

When will the RBA lower the cash rate?


Many economists predict the RBA will likely start reducing the cash rate towards the end of 2024. Here are some of the key forecasts:

Warren Hogan predicts the RBA might keep the cash rate at 4.35% for a while, with a possibility of the first rate cut happening in November 2024, by a larger margin of 0.35 percentage points​.
Source: Australian Financial Review

The Commonwealth Bank (CBA) predicts the RBA will lower the cash rate to 3.6% by the end of 2024, and further down to 2.85% by the end of 2025​.
Source: Yahoo! Finance

Finder’s survey of over 40 experts, including economists and property analysts, indicates a consensus that the RBA will hold the cash rate at 4.35% in the near term. Some experts suggest the first interest rate cuts could be seen by mid-2024.
Source: Finder

These predictions reflect the current economic situation and the RBA’s approach to managing inflation and economic growth. It’s important to note that economic forecasts can change based on new data and global economic developments.

If you’re worried about the cash rate – we’re here to help. Let us take sorting out your home loan interest rate off your mental load. There are still competitive home loans around.

Book a home loan review, so we can help you find out if there’s a better deal out there for you.

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