💥 RBA Decision Has Left Interest Rates On Hold 👏
At its meeting today, the RBA board left its cash rate unchanged at a 12-year high of 4.35%.
Australian borrowers have been granted another reprieve with the Reserve Bank holding its key interest rate steady for a third meeting in a row. While recent data indicate that inflation is easing, it remains high. The board expects that it will be some time yet before inflation is sustainably in the target range.
The bank’s decision had been widely anticipated, amid forecast borrowers will have to wait until at least late September 2024 for any cuts and to remain on hold until at least 2025.
Housing a potential plot ‘twist’
Incoming personal income tax cuts and the May federal budget have been flagged as potential inflation drivers, but HSBC chief economist Paul Bloxham says the housing market is shaping up to be a critical factor in the path for interest rates.
While the RBA does not target house prices specifically, Mr Bloxham said it would not want to fuel a market that is already heating up.
"Although some households have come under pressure from higher interest rates, which has boosted listings, housing demand still appears to be strong relative to supply,” Mr Bloxham said.
“Expectations for rate cuts are also fueling rising housing prices. However, the twist in this story is that the more and faster that housing prices rise, the less likely it is that the RBA will cut rates anytime soon.”