Rate cut ruled out in today’s meeting
The Reserve Bank of Australia (RBA) is expected to keep the cash rate unchanged at 3.6% in today’s monetary policy meeting, with attention now turning to Nov. 4 as the most likely date for the next policy shift.
Mortgage brokerage Bell Partners Finance said that while further rate reductions remain possible this year, the earliest move is now widely anticipated in November, not September.
“The major banks are putting their money on rates staying on hold,” said Mark Stevenson, managing director at Bell Partners Finance. “They believe that the Nov. 4 decision is more likely to bring further good news for borrowers, while Westpac is expecting another half percentage points of rate reductions next year.”
Stevenson also noted that RBA governor Michele Bullock has credited the three rate cuts so far this year with supporting consumer confidence. “The rate cuts have flowed through to the economy, and the strong property market is a great example,” he said.
The latest Finder RBA Cash Rate Survey found that all 32 economists and analysts polled expect the central bank to keep the cash rate steady today. Australia’s four largest banks have also ruled out a September rate cut.
Commonwealth Bank, Westpac and ANZ are maintaining November as their base case for the next reduction, though each acknowledges increasing uncertainty. NAB has pushed its forecast back, now expecting the RBA to hold rates until May next year.
For mortgage holders, a potential November cut could reduce repayments on a $600,000 loan by $87 a month, according to Canstar. The cumulative effect of four cuts this year would see repayments fall by $359 per month on the same loan. Borrowers with loans of $500,000, $750,000, and $1 million would see monthly reductions of $299, $449, and $598 respectively across all four cuts.
Sally Tindall, data insights director at Canstar, however, said a November cut is not guaranteed. “The one rate cut you can bank on is the one you negotiate yourself, either by switching to a lower rate lender or haggling with your current bank,” she said.
“If you’re an owner-occupier paying down your debt, know that the average variable rate is currently sitting at around 5.53%. If you’re not under this mark, ideally well under, then it’s time to ask yourself why.”
The RBA will announce its decision at 2:30pm today. Two further meetings are scheduled for the remainder of the year, on Nov. 3 and 4, and on Dec. 8 and 9.
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