Yahoo Finance RBA expected to spare mortgage holders another interest rate hike
Four out of five experts believe the RBA will hold the cash rate in December.
Aussie mortgage holders should be able to breathe a sigh of relief this Christmas, with experts widely expecting the Reserve Bank (RBA) to keep the cash rate on hold tomorrow.
The central bank hiked interest rates by 0.25 per cent in November to 4.35 per cent, after keeping the cash rate steady for several months.
More than four out of five (82 per cent) experts and economists surveyed by Finder now think the RBA will keep the cash rate at 4.35 per cent, following lower-than-expected inflation figures.
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All of the Big Four banks’ economic teams also believe the RBA will hold the cash rate tomorrow, with CBA, Westpac and ANZ saying the rate has peaked for the current cycle.
A bit over half of experts (54 per cent) believe the cash rate has now peaked, while the remainder think another rate hike could still be on the horizon. NAB is the only major bank that currently expects another hike early in the new year.
The OECD now expects the cash rate will stay on hold at 4.35 per cent until at least the third quarter of next year. From there, it expects the RBA will gradually start cutting rates, bringing the cash rate down to 3.6 per cent by the end of 2025.
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Two months of rate relief
The good news is that borrowers are guaranteed no interest rate hike in January, due to the RBA’s meeting schedule.
“Aussies with a home loan can now look forward to two months of certainty, as the RBA does not make a decision in January, and [it] can only make eight cash rate changes next year,” Finder head of consumer research Graham Cooke said.
From 2024, the RBA board will only meet eight times a year to set interest rates, down from the current 11 times a year.
What are the RBA meeting dates for 2024?
Next year, the new RBA board meeting dates will be:
February 5-6
March 18-19
May 6-7
June 17-18
August 5-6
September 23-24
November 4-5
December 9-10
The board meetings will be longer and will start on the Monday afternoon and continue on to Tuesday morning. The decision will then be announced on the Tuesday at 2:30pm, followed by a media conference with the governor at 3:30pm.
Easing inflation takes pressure off RBA
Australia’s annual inflation rate eased to 4.9 per cent in October, down from 5.6 per cent in September. This was lower than the market consensus of 5.2 per cent.
Core inflation, which is the ‘trimmed mean’ and excludes volatile items, rose 5.3 per cent in October, down from 5.4 per cent.
“The stickiness in core inflation will be a concern for the RBA but the larger-than-expected fall in headline inflation should allow the board to keep rates unchanged at its next meeting,” KPMG chief economist Brendan Rynne said.
“Despite the resilience of the labour market, marked by robust wage growth, the combination of weak retail trade data and the latest inflation data provides substantial grounds for the RBA to pause.”
Moody’s Analytics economist Harry Murphy Cruise said the lower-than-expected inflation print was “an early Christmas present for households and businesses”.
“Combined with the monthly fall in retail sales through October, it is clear that higher interest rates are quelling demand and - by extension - inflation. That should be enough to save the Reserve Bank board from having to be the Grinch of Christmas when it meets next week,” Murphy Cruise said.
Despite an expected hold in December, Cooke warned borrowers they weren’t out of the woods just yet.
“If inflation doesn’t continue to ease, we are looking at another rate rise early next year,” he said.
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