RBA leaves interest rates on hold, dashing Aussie hopes for Christmas

The official cash rate has been left unchanged at 4.35 per cent after the Reserve Bank board met on November 5.

The decision at the second last meeting for the year will mean rates have remained unchanged for a full year.

The annual headline inflation rate sits at 2.8 per cent, its lowest point in more than three-and-a-half years, getting closer to the central bank's target range of two to three per cent.

This RBA board said this drop in inflation was expected due to declines in fuel and electricity prices in the September quarter but said temporary cost of living relief was reflected in the decline, with the underlying inflation sitting at 3.5 per cent.

The bank said it expects inflation to remain low but this underlying inflation is more indicative of inflation momentum and remains too high.

The RBA board said it "is not ruling anything in or out" and expects it to be some time before inflation sits stable at its target range.

Cut before Christmas unlikely
Despite falling inflation, Finder's head of consumer research Graham Cooke said homeowners will need to "hold on a bit longer for some relief" with a rate cut this side of Christmas not looking likely.

"The good news is that 2025 will almost definitely bring multiple rate cuts." Mr Cooke said.

All 38 experts surveyed by Finder predicted rates would remain on hold, matching their correct September predictions.

Only one expert predicts a rate cut at the final meeting for the year on December 10.

The economic teams at all four big banks expect the first cash rate cut at the first meeting next year in February, with projections between three and five cuts forecast.

Mortgage Choice CEO Anthony Waldron said while a rate cut remains on the horizon, he expects the RBA will want to be more confident of eased inflationary before making the call.

Two important data releases from the Australian Bureau of Statistics were key factors in the bank's decision to hold, according to Mr Waldron.

"The first is the latest quarterly ABS Consumer Price Index, which showed that underlying inflation remains high, despite inflation now sitting within the RBA's target of 2-3 per cent," he said.

"And the ABS Labour Force data showed that the employment and participation rates are at record highs, which could put upward pressure on inflation."

Mr Waldron said he encouraged hopeful buyers to meet with a broker to ensure they understand their borrowing power and recommended that current mortgage holders speak to their broker to review if their loan is still the best option.

Data from Canstar has found at least one million home loans have switched to a new lender since the start of the current rate hikes.

Canstar data insights director Sally Tindall said that, while refinancing may be down from the 2023 peak, it shows borrowers are still seeking relief from higher interest rates,

"This Friday, the current cash rate of 4.35 per cent will have been in play for a full year, yet despite this, lenders keep shaving down their variable rates," Ms Tindal said.

"Last month alone, 17 lenders made cuts to at least one of their variable rates. What this tells us is that competitive pressure, which is being driven by customers refinancing, is pushing rates down."

(Source: The Area News)