RBA interest rate call 'plays with fire' as Aussies face business collapse and job losses

And that’s a wrap on today’s RBA coverage.

The cash rate has been held at 4.35 per cent after the central bank flagged inflation was “too high”.

This marks the seventh consecutive hold and means mortgage holders will be slugged with the 13-year high rate until at least November 5, when the board meet again on Melbourne Cup Day.

Michele Bullock didn’t express confidence in a rate cut this year and there’s been no moves in predictions from the major banks. You can check out their stance on when a cut will come here.

We are due to get the monthly consumer price index report from the Australian Bureau of Statistics on Wednesday, which some have argued will put Australia in the RBA’s inflation target band.

However, there’s been debate about whether headline inflation is an indicator of economic health that warrants an interest rate cut after speculation cost-of-living measures are skewing the reading.

Finance expert Sarah Megginson has sounded the alarm on an interest rate cut you could cash in on today, as more banks offer lower rates with a catch.

Outside of interest rates:

China has unveiled an aggressive stimulus package designed to pull its struggling economy out of a deflationary tailspin, spiking Australian commodities of Iron ore and copper.

A popular electric car brand has slashed the price of its cars as competition heats up in the EV market.

Critics are piling on Coles and Woolworths after the ACCC launched legal proceedings against both major supermarkets for allegedly duing customers with misleading discount pricing claims.

Finance guru Mark Bouris has called out the “red tape” holding back Australian businesses.

We will be back tomorrow with more finance coverage, and with a live blog on November 5 when the RBA will deliver its next cash rate call.

The major press conference has wrapped up and the final point we think will be of interest to you is when the RBA think interest rates could come.

Unfortunately, we can't pull out the crystal ball and it appears nor can Bullock.

She was pressed on why an interest rate hike wasn't considered, and in that response, she gave us the strongest indication on cuts.

"The message clearly from the board is that in the near term, it does not see interest rate cuts," Bullock said.

However, Nerida Conisbee, chief economist from Ray White, said: "A cut this year is now possible."

She said pressure was building as inflation appears to be on track to hit the upper limit RBA's target band.

"Next year is looking far more positive for mortgage holders," Conisbee said.

"Markets are currently pricing in four cuts for 2025 and another in early 2026.

"In response, mortgage providers are now cutting fixed rate home loans on average by 0.23 per cent.

"Not surprisingly, given the outlook for rate cuts, take up has been very low with consumers likely mindful of significant cuts to come."

Check out a full summary on the decision and the day's events from our Finance Reporter Tamika Seeto, here.

There have been fears that the RBA's laser focus on getting inflation down at all costs could plunge Australia into a recession, with some pundits claiming the country is already in the grips of one on a per capita basis.

RBA governor Michele Bullock was asked whether she's "confident" in the Australian economy remaining resilient enough over the next 12 months to avoid that bleak path.

She said the central bank's forecasts aren't predicting a recession over the next year, however there are a lot of factors that can change in that time frame.

"If you look at the forecasts, there are very wide bands... the further out you go, the broader the bands of error," she explained to reporters.

"Certainly we are aiming not to end up in recession. That's what we're aiming for. Could I guarantee it? No. You only have to look at the forecast errors to see I can't guarantee anything."But certainly, that is what we are aiming at."

The RBA governor didn’t make any surprise claims when asked why Australia was not following other central banks in cutting interest rates.

She said Australia did not squeeze borrowers with interest rates as high as international counterparts and therefore were on a different trajectory in combating inflation.

“Most of those countries had official interest rates up around five or over 5 per cent so in our judgment, we look at how restrictive some of those countries are relative to us,” Bullock said.

“We’re restrictive, but we think they are more restrictive than us.”

She said there had not been a similar “deterioration” in the labor market either, earlier noting Australia’s employment level was still strong.

The RBA governor was asked whether the central bank's 'blunt' mission to bring down inflation takes into account the "human" element when deciding whether to cut, hold or hike rates.

Bullock was told economics can be "quite heartless" when she was questioned over her assertion that five per cent of Australians will be forced to sell their houses as they buckle under the pressure of 13-year-high interest rates.

It was a speech given earlier in the month as GDP figures were released, and Bullock encouraged people to read it in its entirety to get a proper steer of her position.

"We understand that there are some very, very difficult decisions going on here," she said.

"That was the purpose of the bit in the speech ... It was it was not advice to people.

It was really to recognise that we understand that there are some very difficult decisions going on here.

"I wanted people to understand that we do know this ... although we can't do anything about it with our interest rate policies because we only have one interest rate."

But she put the pressure on homeowners back onto the government's lap by saying Labor has "more tools at its disposal" to address the cost-of-living crisis.

Here’s the answer to one of the lingering questions we had. The RBA’s choice to focus on underlying inflation, not headline inflation.

“It's quite volatile. It moves around quite a lot because it's only partial. It doesn't capture everything,” she said of the headline inflation figure.

She said the cost of services was at the “crux of the matter”, noting the cost of building as a sore point.

Bullock did make mention of the cost of-living relief impacting the August monthly consumer price indicator.

“We will expect to see the cost-of-living relief come into play,” she said.

“That’s going to lower energy prices. Fuel prices have also come down in recent months, so we’re expecting it could well be on current forecasts that the headline inflation rate comes in below 3 per cent.

“It’s reflecting cost-of-living prices that people are paying, but it’s not really reflective of the underlying inflation pulse.”

Michele Bullock kept it brief as she addressed the elephant in the room. It wasn't long until the RBA governor was pressed on festering commentary that Treasurer Jim Chalmers should challenge the RBA's independence and overrule its decision to not cut rates – a course of action now favoured and pushed by the Greens.

"We had a meeting in the past couple of days in which the board were extremely focused on what we have to do to get inflation down and that's the focus," she said.

"I'm not focused on what other people are saying."

When asked about the Greens' stance specifically, Bullock, as expected, dodged the question.

"I'm going to stay out of the politics," she said.

Michele Bullock said the board changed up the formatting of their meeting this month.

Bullock said the board “didn’t explicitly discuss an interest rate rise at this meeting”.

That's surprising considering the language used in the monetary policy statement, which you can look at here.

“The way we framed the discussion really was around what had changed since August, and what would we need to see to go either raise interest rates or lowering interest rates,” she said.

“So there wasn’t an explicit alternative in the sense that I’ve talked about in the past.”

This might indicate not much has changed since meeting, but could be an encouraging glimmer of hope for some struggling mortgage holders.

Entrepreneur Mark Bouris signalled that goods and services could continue to rise and put further strain on the cost-of-living crisis.

He noted that the Reserve Bank of Australia made a comment following the September interest rates meeting that productivity is stalling across the board.

"This becomes important because if wages increase and employers can't get more productivity, generally speaking, one of the responses to that is to put prices up with their products that they put out into the marketplace," Bouris said following the RBA's decision to hold rates.

"So the Reserve Bank's observation of our productivity remaining low is a bit of an issue that indicates that vendors or manufacturers may tend to continue to put prices up."

Michele Bullock will front reporters in just minutes.

The big questions lingering today include:

• Why Australian is not acting while our international peers cut interest rates

• Why is the central bank so focused on bringing down underlying inflation

Air could also be given to a call from the Greens for Jim Chalmers to override the RBA's decision.

Bullock is also likely to be confronted by questions about the impacts on struggling Australians, some of which she has already conceded will lose their homes.

There’s been a lot of discussion about headline inflation and underlying inflation.

Headline inflation is tipped to drop when the August consumer price index data is released on Wednesday. But underlying inflation is not expected to mirror those results.

Underlying inflation strips out volatile items like petrol.

Economists have expressed concerns that the headline number is nothing more than “smoke and mirrors” as it has been heavily swayed by cost-of-living measures like the $300 federal government energy rebates and tax cuts.

Why does this matter? Some argue this is only temporarily pushing inflation into the manageable target and that if people start spending more, the fight against inflation will get “a whole lot harder”.

“They're watching underlying inflation because the headline numbers will be volatile due to policy changes that have been made, rather than telling you about the underlying pace of inflation in the economy,” HSBC Chief Economist Paul Bloxham told the ABC.

“It's going to be worth watching that figure tomorrow because it's obviously going to be really interesting to see if that plays out that way."

Jim Chalmers has hit back at claims cost-of-living relief has had an "artificial" impact on inflation and backed the policy decisions made by the Albanese government.

"We've designed our cost of living relief to help take some of the edge off these price pressures in our economy, rather than make them worse," he said on Tuesday following the RBA decision.

"You know, there's nothing artificial about helping people with their electricity bills or making early childhood education cheaper, or medicines cheaper, or a tax cut for every taxpayer or energy bill relief for every household, getting wages moving again.

"We're doing all of this in the most responsible way we can. Our primary focus is on the fight against inflation, but we can't ignore those risks to growth."

Treasurer Jim Chalmers says Australia has made "substantial progress" in tackling inflation as he addressed yet another rate hold.

Such words will be of little comfort to struggling homeowners, especially to those having to sell their homes with rates sitting at a 13-year high. He also repeatedly pushed how Labor had managed to get inflation under control after taking over from the Coalition when inflation was "6.1 per cent and rising".

"The fact that rates haven't gone up for the best part of the year now is an indicator of that," he told reporters.

Chalmers has been targeted by the Greens, saying he needs to get to grips with the RBA and enforce a rate cut by using powers available to him that have never been used.

Unsurprisingly, like a host of Labor ministers, he crit the Greens' stance, branding it "whacky".

"I respect and cherish [the RBA's] independence," he said.

First it was the US and then China. The world's two biggest economies both cutting their interest rates. But despite that, Michele Bullock is adamant we will be embarking on our own journey, that's if the RBA's remarks following another rates hold are anything to go by.

"They were very clear about the fact they're not ruling anything in or out which is their way of signalling they would consider potentially lifting interest rates still again even though the rest of the central banks around most of the developed world have started to cut them," HSBC Chief Economist Paul Bloxham told the ABC after the RBA once again held the interest rate at 4.35 per cent.

"Australia's problem is quite unique, we look a bit different. Inflation is proving to be stickier here and taking longer for it to come down and the RBA has it front and centre that that's their focus."

And in a prediction no homeowner wanted to hear, Bloxham believes the first cut will come "well into" 2025.

"That's because the core inflation story, the underlying inflation story, is still too persistent."

Sticky inflation is to blame for another hold decision.

Headline inflation has come down, but core inflation is not yet where the Reserve Bank wants it.

“While headline inflation will decline for a time, underlying inflation is more indicative of inflation momentum, and it remains too high,” the RBA said in its statement of monetary policy.

“The most recent projections in the August SMP show that it will be some time yet before inflation is sustainably in the target range.“

Interestingly, the board have stuck with the mantra of “not ruling anything in or out” and did not pull back on the possibility of increasing interest rates in the future.

“Data since then have reinforced the need to remain vigilant to upside risks to inflation and the Board is not ruling anything in or out,” the board said.

“Policy will need to be sufficiently restrictive until the Board is confident that inflation is moving sustainably towards the target range.”

Ok there it is. As expected, the RBA has held the interest rate at 4.35 per cent.

Plenty of reaction to follow.

We are closing in on a decision, with less than 20 minutes to go.

Inflation, household savings, unemployment and productivity growth are all economic conditions considered by the RBA when determining the cash rate.

At a quick glance, here are the numbers:

Inflation: 3.5 per cent
Household saving: 0.6 per cent
Unemployment: 4.2 per cent
Productivity growth: 0.05 per cent

But if you’re not an economist, there’s another sign you can look for later today as the RBA board justifies its decision.

You can make some deductions about the general thought pattern of the board based on what they do, and do not discuss.

Michele Bullock could talk about whether arguments for interest rate cut, hike or hold were mulled over.

Gareth Aird, chief economist at the Commonwealth Bank, said chat of an increase was likely “lip service” and it is more interesting to note if discussions of a hike were not had.

He said the board had not considered just one option since its March meeting. Aird’s bank is the only one anticipating a potential interest rate cut in December.

The press conference kicks off at 3.30pm.

Sadly this is most Australian homeowners right now.

Thirty minutes to go.

Ok well we're less than an hour away from the RBA's announcement.

Earlier today we showed you our tracker revealing how the last couple of years have panned out. Now in the following visual we can follow the interest rate all the way back to the early 90s where it sat a whopping 12 per cent.

A rate as high as it sits currently at 4.35 per cent hasn't been seen since November 2011.

It's a question we posed to you earlier today, but it's worth reframing now we've had some results come in.

Michele Bullock said about five per cent of people with a variable-rate mortgage were already facing a “cash flow shortfall”, basically spending more than they bring in.

They risked having to make “quite painful adjustments”, with an unfortunate few having no choice but to sell up.

“Some may ultimately make the difficult decision to sell their homes," she said earlier this month.

However early results from our poll today asking if you’d need to sell your home if there were no rate cuts this year indicate the problem may be far greater.

More than 20 per cent of people have suggested they’ll need to put their home on the market, quadruple the number of people Bullock flagged were really struggling.

The poll results are more in line with remarks from Finder home loans expert Richard Whitten who said the number of people struggling to make their home loan repayments has reached “a disturbing level”.

It also comes as leading researcher Roy Morgan's latest data found 29.5 per cent of mortgage holders were at risk of payment stress in the three months to August 2024.

So where do you stand? Have your say below.

In light of China’s move, let’s consider how the RBA rebuffed comparisons to other developed nations following the RBA’s August cash rate call.

Michele Bullock said the board would not be succumbing to “peer pressure” when prodded about other nations dropping their interest rates.

“That’s been used against us,” Bullock said.

“Some commentators are very certain that we haven’t gone high enough, and we need to go more.”

Canada had made two cuts in June and July, while the European Central Bank dished one out in June.

A week before the meeting, the Bank of England made a cut.

Since then New Zealand cut rates by 25 bps to 5.25 per cent, in the first easing in over four years.

Most recently, the US Federal Reserve joined the ranks, cutting by 50 basis points.

But the RBA has been stead-fast that it will not be swayed by other economies, arguing Australia is in a very different position than many of its peers.

Some economists agree.

"They all put their rates up a lot more than the RBA did, and they all put them up earlier than the RBA did too," independent economist Saul Eslake said.

Now if the cash rate remains at 4.35 per cent today, as many predict, it's worth noting we'll be stuck at that rate for close to six weeks with no RBA meeting scheduled for October.

There are two meetings remaining for 2024, the next coming on November 4-5 and the final one of the year pencilled in for December 9-10, meaning there are limited opportunities for that long-awaited cut to happen this year.

China has announced a string of new policies to boost its flailing economy, including cuts to the mortgage rate for existing housing and its reserve requirement ratio.

China is battling a far different war to Australia, however. Here, the RBA is using interest rates to try and bring down inflation.

There, deflation is the problem.

Yahoo Finance contributor Stephen Koukoulas broke down exactly why China's economic performance matters to us more than any other country here.

He responded to the breaking news on China's US$141 billion move by reiterating that Australia should join the ranks of other nations easing monetary policy.

We'll bring you more reaction shortly and you can read more on China's big move here.

Prime Minister Anthony Albanese has had his say on the Greens' bold ultimatum in their bid to force through an interest rate cut, urging the minor party to come to the table with "serious policies".

"We have an independent reserve bank and the Greens policy would, quite frankly, have a negative impact on economic growth and the way we conduct economic policy," he told reporters in Perth this morning.

"Central banks are independent of government. They occur in just about every major economy in the world. What the Greens do is engage in populism often in conjunction with their partners in the 'noalition', the Liberal party and the National party, to just say no to everything.

"What we need in this country is serious policies that take us forward."

The Greens have withheld support for reforms to the Reserve Bank unless the financial institution cuts interest rates or the government enacts never-before used powers and steps in to lower the cash rate.

Stressed mortgage holders may have to accept that the RBA is not going to drop interest rates today.

However, banks have started to reduce their home loan offers.

Yahoo Finance contributor David Koch said there’s been a trend of cuts across the mortgage market, including some of Australia’s biggest banks.

Commonwealth Bank of Australia (CBA) lowered rates on its fixed and variable mortgages by up to 0.70 per cent. The bank’s three-year fixed rate dropped from 6.59 per cent to 5.89 per cent.

Westpac also reduced its LVR <70 per cent fixed rates to 5.89 per cent, matching CBA’s new offering.

But, for some of these offers – there is a catch.

A fixed-rate deal could see you worse off if the RBA does cut interest rates later in the year.

“Fixed home loans are great for shielding you from rate rises, but they will block you from taking advantage of a rate cut,” the Compare the Market economic director told Yahoo Finance.

“Banks won’t reduce their fixed rates unless they think it’s a safe bet for them. The reality is rates could be a lot lower in four years’ time.

“History tells us it’s usually better to remain a bit flexible and consider staying on a variable rate when we’re at the peak of the cycle and rates are widely tipped to go down.

Yahoo Finance readers are of the same opinion.

A poll of nearly 2,500 people found 67 per cent wouldn't fix their mortgage rate as they were worried it will hurt them down the track.

Here’s the latest offers, would you take the bait?

Michele Bullock has remained bullish in her approach to handling the interest rate, and has previously warned struggling Australians to not expect a rate cut this year.

And offering a frank assessment for those on the brink earlier this month, she said "some may ultimately make the difficult decision to sell their homes".

Scott O'Neill, CEO of Rethink Group, told Yahoo Finance the number of Australians defaulting on their home loan is rising.

"Recent data from APRA for the March quarter indicates that mortgage arrears are on the rise, though they remain low compared to pre-COVID levels. Currently, mortgage arrears—consisting of non-performing loans and borrowers who are 30-89 days late on payments—account for 1.6% of home loans across all Authorised Deposit-taking Institutions (ADIs)," he said.

So if we don't see a rate cut until 2025, will you be forced to sell up? Let us know below.

We bring you more now about the Greens' ultimatum where they refused to support RBA reforms unless Labor stepped in and forced a rate cut with never-before used powers.

Treasury spokesman Nick McKim led the charge, arguing the RBA are not "high priests who are beyond criticism" and called for Jim Chalmers to take action.

Finance Minister Katy Gallagher branded the stance as "crazy" and said the party was "out of control".

Well veteran journalist Michelle Grattan, Chief Political Correspondent at The Conversation and professorial fellow at the University of Canberra, was slightly more reserved with her damning assessment of the Greens' bold move.

"What the Greens are demanding is bad economic policy. Whether it is crazy politics remains to be seen," she said.

"From time to time the Reserve Bank comes under sharp criticism, from experts and from the public.

"But the bank’s essentially independent status is a bulwark against monetary policy becoming the creature of short-term politics, as McKim would have it.

"What the Greens are proposing, having the treasurer use his power to overrule the bank board to get his way on legislation, is irresponsible.

"It’s also illogical. The whole point of the proposed dual boards is to strengthen the bank’s expertise as the independent setter of monetary policy. But McKim wants, in essence, to scrap that independence."

Here's a reminder for you all about what's happened in the past two-and-a-bit years. Interest rates started to climb in May 2022 and since then we've had an increase of 425 basis points to reach the 4.35 per cent we're at now.

We've been at this rate for nearly a year now and the general consensus is the next change will be a cut, but of course as we know, nothing can be ruled out.

A hold today will mean the cash rate will be at 4.35 per cent for a full 12 months, with the next opportunity for a drop not coming until November (on Melbourne Cup day).

That’s the seventh consecutive hold.

So what’s the extra burden on Aussie households? According to The Reserve Bank Housing Loan Payments data, Australians are being charged $14.53 billion a month to cover their mortgage repayments.

Canstar crunched some numbers and calculated 66 per cent of scheduled mortgage repayments in June this year were interest.

In March 2021, then-Govenor of the RBA, Philip Low made the sensational call that interest rates would likely stay at a record-low of 0.1 per cent until at least 2024.

A year later, before the RBA’s aggressive rate-hiking cycle, Australians were spending $9.01 billion on monthly repayments.

Push forward 16 months to June, with the cash rate at a 13-year-high, Australians are paying a staggering $5.52 billion more a month.

“It’s incredible to think Australian borrowers are having to shell out an extra $5.5 billion a month in mortgage repayments,” Canstar’s Data Insights Director, Sally Tindall said.

“What’s even more incredible is that most households are managing to make it work.”

She said cash rate cuts would be “music to borrowers’ ears” but poured water on the idea of a move “any time soon” given economic indicators.

“Underlying inflation is tracking in the right direction but the reality is, it’s still sitting firmly in the 3’s,” Tindall said.

“With unemployment holding steady at 4.2 per cent, the RBA has cover to continue its ‘wait-and-see’ strategy to get the job done, and properly.”

The next round of data from the Australian Bureau of Statistics on inflation is due tomorrow and could show a drop in headline inflation, largely due to the government’s electricity bill rebates.

But that doesn’t create any assurances for a rate cut.

“The RBA has said it will be looking past this drop. The Board isn’t going to base its monetary policy decisions on temporary measures,” she said.

And it's not just the banks who can't agree on when we'll get that first rate cut. In this month's Finder RBA Cash Rate Survey, where 42 experts and economists made their predictions, 39 of the votes are stretched across a 7-month window. Take a look below.

The end of the bar chart is something struggling homeowners might want to shield their eyes from, with 2 experts believing a rate cut will only come in 2026. Let's hope not.

Good morning. The Reserve Bank of Australia is set to make its sixth decision on the cash rate for 2025.

It is widely expected that it will remain on hold again, at 4.35 per cent.

A Yahoo Finance poll of more than 5,000 found 65 per cent think it's time for the RBA to cut interest rates.

The RBA is expected to maintain its hawkish outlook, with Governor Michele Bullock reiterating at the past several meetings that the board is not anticipating a cut this year.

The remaining 35 per cent of polled readers agreed that inflation is “not yet under control”.

However, economists at Australia’s biggest bank don’t agree. Commonwealth Bank has still forecast a potential 2025 cut, however last week pushed that projection back from November to December.

It thinks there will be five 0.25 per cent cuts by the end of 2025, taking the cash rate to 3.10 per cent.

Westpac thinks there will be a cut in February 2025, with four 0.25 per cent cuts in total to bring the cash rate down to 3.35 per cent.

NAB thinks it will be in May 2025, although it says February is possible, with five 0.25 per cent cuts down to 3.10 per cent.

ANZ has forecast a February 2025 cut, with three cuts in total to bring the cash rate down to 3.60 per cent.

Follow along today for live expert commentary and reactions ahead of the 2.30pm decision and 3.30pm press conference.