Homeowners are breathing a slight sigh of relief following the Reserve Bank of Australia’s (RBA’s) decision to leave the cash rate on hold.
The Reserve Bank of Australia (RBA) announced today that it would hold the official cash rate at 4.1% for another month, but it says inflation still needs to reduce significantly to be within its target range of 2-3%.
RBA Governor Philip Lowe says the bank’s decision to increase the cash rate 12 times since May 2022 is “working to establish a more sustainable balance between supply and demand in the economy and will continue to do so”.
“In light of this and the uncertainty surrounding the economic outlook, the board again decided to hold interest rates steady this month. This will provide further time to assess the impact of the increase in interest rates to date and the economic outlook.”
The RBA has increased rates every month since May 2022, with the exception of April and July, in a bid to curb inflation and prevent long-term economic damage. The cash rate has increased from a historic the historic pandemic low of 0.1% to 4.1% – leading to intense mortgage pain for many homeowners.
Inflation data released by the Australian Bureau of Statistics (ABS) last week showed that while inflation remained above target, it is falling more quickly than RBA predictions. The latest Consumer Price Index (CPI) showed consumer prices rose 0.8% in the 3 months to June, making a 6% increase over the past year. Inflation for the quarter came in at 0.9% and 5.9% over the 12 months to June.
Last month Federal Treasurer, Jim Chalmers, announced that RBA Deputy Governor, Michele Bullock, would replace Lowe as Governor from September 18. Read more about Bullock’s appointment here.
