The Reserve Bank of Australia (RBA) is widely tipped to kept interest rates on hold at 4.35 per cent when it completes its two-day meeting today.
Mortgage holders hoping for some Melbourne Cup day relief are likely to be disappointed when the central bank announces the official cash rate at 2.30pm.
Despite the inflation rate slowing and falling within the RBA’s target range of 2 per cent to 3 per cent, most economists say the figures are unlikely to lead to a pre-Christmas interest rate cut.
The RBA remains concerned about the underlying trend of inflation, despite the quarterly consumer price index dipping to 2.8 per cent over the year to September, down from 3.8 per cent in June.
Governor Michele Bullock has previously said she and her board are looking for signs that inflation is “sustainably” back to target.
While headline inflation drastically slowed on the back of government energy rebates and falling petrol prices, the main measure of “core” inflation – the trimmed mean – remains higher.
Many economists believe mortgage holders will probably have to wait until early next year for an interest rates cut.
Australia’s big four banks – the ANZ, Commonwealth, NAB and Westpac – are forecasting the RBA could cut rates by 0.25 of a percentage point in February 2025.
ANZ believes the RBA will slash the cash rate by 0.25 per cent three times next year, both CBA and Westpac have pencilled in four cuts, while NAB is predicting five.
According to Canstar, four rate cuts, which would reduce interest rates by 1 per cent, would reduce repayments for a $600,000 mortgage by $357 a month – nearly $4500 a year.
But the markets are not pricing in any initial cut until April 2025.
