Yahoo Finance RBA keeps rates on hold but more pain may be on the way
The RBA has kept interest rates on hold for the fourth month in a row.
There’s some cold comfort for mortgage holders after the Reserve Bank (RBA) again kept rates on hold but it may just be delaying more pain.
This is the fourth month in a row that the RBA has kept the cash rate steady at 4.1 per cent, after hiking interest rates 12 times since May last year.
Delivering her first interest rate decision as RBA governor, Michele Bullock said inflation had passed its peak but was "still too high and will remain so for some time yet".
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"Timely indicators on inflation suggest that goods price inflation has eased further, but the prices of many services are continuing to rise briskly and fuel prices have risen noticeably of late," Bullock said.
"Rent inflation also remains elevated. The central forecast is for CPI inflation to continue to decline and to be back within the 2–3 per cent target range in late 2025."
Bullock warned "some further tightening of monetary policy" may be required, but this would depend on the data.
Rate hikes not off the table
Experts are currently divided on whether we will see another cash rate hike before the end of the year.
Almost half of those surveyed by Finder believe the cash rate has now peaked at 4.10 per cent, while around 42 per cent believe the cash rate will peak at either 4.35 per cent or 4.60 per cent.
Graham Cooke, head of consumer research at Finder, said home loan borrowers still needed to remain vigilant.
“A fourth consecutive rate hold from the RBA will be welcome news to mortgage holders, many of whom are struggling with higher repayments,” Cooke said.
“While homeowners have been given a break, stubborn inflation means we could still see another rate hike before Christmas.”
Aussie economy snapshot:
The average Aussie has $39,459 in savings in September, but 44 per cent surveyed wouldn't survive a month if they lost their jobs
Cash rate: Held at 4.1 per cent in October but tipped to go up before coming down
The Aussie dollar has depreciated against the US greenback
Costs still increasing: Rent, electricity, gas, dairy, bread, petrol
Home values are trending up but there are more short-term sales at a loss, indicating interest rate pressure
150,000 mortgages have come off ultra-low fixed rates this year, and another 730,000 will follow
Only a slight increase in loans past due, but this is expected to increase
New owner-occupier data indicates more people are buying homes for themselves than investments
NAB is the only of the Big Four banks predicting another rate rise before Christmas
Retail sales are slowing, luxuries are being ditched
Recession a possibility
There’s also a one-in-three chance of Australia falling into a recession next year, according to Finder’s panel of experts.
Australia entered a per-capita recession in June after two consecutive quarters of negative per-capita GDP growth.
Cooke encouraged Aussies to create a financial buffer, after finding the average person had $39,459 tucked away in savings.
“The best way to safeguard your finances ahead of a potential recession is to pay down urgent debts and look out for more ways to save,” Cooke said.
“A solid budget is also your ticket to financial freedom. Budgeting will show you where your money is going, what your essential expenses are, and where you have capacity to save.”
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