Yahoo Finance CBA says RBA to deliver $1,380 blow to Aussies
The RBA may keep the cash rate on hold next week, but it depends who you ask.
The Reserve Bank of Australia (RBA) is set to meet on Tuesday next week to decide whether to hike the official interest rate yet again, or give Aussies another month of reprieve.
But what they will do is still up for debate, with experts split on the decision. But Australia’s biggest bank said Aussies should prepare for another hike.
Commonwealth Bank (CBA) is predicting another hike next month after the RBA kept rates on hold in July.
Also read: Rate hikes must end as inflation free-fall continues
Also read: Another RBA rate hike could send Australia into recession
Another RBA hike would cost a mortgage holder with the average-sized loan of $584,836 around $1,380 more per month than they were paying in April last year before the RBA started lifting rates, according to data from Finder.
Potential impact to borrowers if the cash rate rises to 4.35%
Loan size | Increase of 0.25% | Total increase across 13 hikes |
$500,000 | $76 | $1,211 |
$750,000 | $115 | $1,816 |
$1 million | $153 | $2,421 |
Source: RateCity.com.au
Why the RBA might keep rates on hold
This week, the Australian Bureau of Statistics (ABS) released the latest inflation figures, which showed the cost of living had eased - which is exactly what the RBA wants.
“The slowing of Australia’s annual inflation rate for the second quarter in a row increases the likelihood of a second consecutive pause in the cash rate following next Tuesday’s [RBA] board meeting,” RateCity research director Sally Tindall said.
“The cash rate could well be at the peak, but no-one can say this with any degree of certainty just yet. There’s enough in this month’s data that potentially points to another hike in the months to come.
“On balance, a pause is shaping up to be the card the RBA is most likely to play this month.”
Why the RBA might hike interest rates
CBA said while easing inflation figures had made the RBA decision another “line-ball” call, it believed a hike was still on the cards.
“At this stage, we continue to expect the RBA to lift the cash rate one final time in August,” the economics team said.
“Inflation remains well above the RBA's target band of 2-3 per cent, with the annual trimmed measure broadly around 6 per cent, and is currently projected to only return to the top of the bank's target by mid-2025.”
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