Major hint RBA set to cut interest rates again in $90 per month win for Aussie homeowners: 'Pull the trigger'
Homeowners could soon see another slice of mortgage relief delivered in just a few weeks after positive inflation data was released. The Australian Bureau of Statistics (ABS) revealed trimmed inflation, which is the metric the Reserve Bank of Australia (RBA) closely follows, fell from 2.9 per cent to 2.7 per cent, the lowest level since December 2021.
That puts inflation in touching distance of the Board's desired midpoint of 2-3 per cent, and could help secure an interest rate cut at its August 11 and 12 meeting. Canstar's director of data and insights, Sally Tindall, told Yahoo Finance this result is the confirmation the RBA "has been waiting for".
“This, combined with the surprise lift in Australia’s unemployment rate, should be more than enough for the RBA to pull the trigger on the third cash rate cut for the year," she said.
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“Inflation is cooling in key categories that have been cause for concern for the central bank. Services inflation is still too high, at an annual rate of 3.3 per cent, but it’s now at the lowest level since June 2022.
Canstar found a homeowner with a $600,000 mortgage would save $90 per month with a 0.25 per cent cut next month. That goes up to $150 per month with a $1 million mortgage.
eToro market analyst Josh Gilbert said this latest data point is making it "harder" for the RBA to keep holding interest rates.
"After the surprise pause in July, today’s data means an August rate cut is all but nailed on," he added.
He said markets have priced in a 93 per cent chance of a cut next month, and cited how cost-of-living pressures on homeowners would mount more pressure on the RBA to provide some relief.
But he hinted there might not be much more movement in the cash rate for several months.
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"The RBA’s inflation fight looks all but won, and the board has a narrow window to move before downside risks mount further," Gilbert said.
"The RBA’s measured approach so far means that following a cut in August, we may only see one further cut until the end of the year. Nonetheless, rates are coming down, and that’s a win for equity markets and mortgage holders."
Commonwealth Bank (CBA), Westpac, NAB and ANZ all believe the RBA will cut interest rates next month. But they're divided on how many more there will be in this cutting cycle.