RBA rate cut live updates: Reserve Bank of Australia Governor Michele Bullock on why interest rates were held
Australian homeowners praying for relief from the cost-of-living crisis have been dealt a cruel blow with the RBA electing not to cut interest rates.
Follow the latest by scrolling through the posts below.
Key Events
Treasure Jim Chalmers fronting the press on rates decision
Jim Chalmers is holding a press conference to discuss the unexpected decision by the RBA to keep rates on hold at 3.85 per cent.
He’s talking up the falling inflation and suggesting that that helped the RBA feel comfortable cutting rates.
“It’s clear now the direction of travel, and the Board has decided to wait for more information about in order to inform future decisions about interest rates,” Dr Chalmers said.
“We have made a lot of progress together on inflation and the Reserve Bank Statement recognises that today.
“We know the job’s not finished, because people are still under pressure, and the global environment is so uncertain. And some of that global uncertainty is also recognised in the Reserve Bank’s statement today.”
RBA ‘misses opportunity’: Housing Industry Association
The HIA has hit out at the decision, saying it’s a “missed opportunity”.
“This decision will leave new home building activity more constrained than necessary, for longer, but the previous two cuts to the cash rate have seen an improvement in market confidence that is likely to continue,” senior economist Tom Devitt said.
“Recent inflation data shows that the RBA’s preferred trimmed mean measure has been within their 2-3 per cent target band for over a year now, and continues to decline.
“Household spending has also been constrained, with Australia having been in an almost uninterrupted per capita recession since mid-2022.
“This recent data reinforced the market expectation that the RBA would deliver a cut at their July meeting – an expectation that was disappointed today.
“By most of the RBA’s own estimates, the cash rate remains in restrictive territory, meaning it is still constraining household and business spending across the economy, including in the home building industry.”
Homeowners urged to ‘save anyway’ despite rates being held
Compare the Market economic director David Koch says while today’s call may be disappointing, there were still ways they could save - by switching to a better rate.
“There can be a 0.50 per cent difference between some of the advertised rates on Compare the Market’s home loans panel so you can effectively create your own rate cut by shopping around,” Mr Koch said.
“That could represent a saving of $210 on monthly repayments - or $2520 over a year - for someone with an average $660,000 loan.
“And that’s just looking at rates for new customers, which we know are often much more enticing than the rates available to older customers who have not refinanced in a number of years.”
‘Not the result Australians were hoping for’: Treasurer
Treasurer Jim Chalmers has issued a statement saying the decision is not the one many Aussie homeowners were hoping for.
“Today the independent Reserve Bank left interest rates on hold at 3.85 per cent,” Dr Chalmers says.
“It’s not the result millions of Australians were hoping for or what the market was expecting.
“We have made substantial and sustained progress on inflation which is why interest rates have already been cut twice in five months this year.
“We’ve seen elsewhere that when central banks cut rates, they don’t always cut at every meeting.
“The RBA has indicated the direction of travel on inflation and interest rates has been established.”
The statement then goes on to say how the Albanese Government is doing a great job managing the economy.
“We recognise that people are still under pressure and there’s more work to do in our economy and that’s why the cost-of-living relief that we’re rolling out right now is so important,” he said.
What the Reserve Bank said
Essentially, they’re not too happy with where inflation is at.
“The board continues to judge that the risks to inflation have become more balanced and the labour market remains strong,” the board said in a statement.
“Nevertheless it remains cautious about the outlook, particularly given the heightened level of uncertainty about both aggregate demand and supply.
“The board judged that it could wait for a little more information to confirm that inflation remains on track to reach 2.5 per cent on a sustainable basis.”
Huge decision
This is a big call by the Reserve Bank, who have clearly been spooked by the economic outlook right now.
The latest tariff news may have played some role in this call.
It’s a hold!
The Reserve Bank has NOT issued back-to-back cuts for the first time since 2020.
The cash rate remains at 3.85 per cent.
Staytuned for all the wash-up and reactions from the news.
Three minutes to go
We’re about to find out whether it’s good news or not-so-good news for Aussie mortgage holders.
Stay tuned!
Only one in 10 homeowners actually reducing mortgage payments
In a sign that the average Australian is working smarter, not harder, new data shows that borrowers are opting to get ahead on their home loans rather than reduce their mortgage repayments.
From view.com.au:
Despite cost of living pressures Australian borrowers are opting to get ahead on their home loans, rather than taking the option to take a cut in their repayments.
Australia’s biggest lender, the Commonwealth Bank, has reported that only 10 per cent of eligible home loan customers chose to reduce their mortgage direct debit repayments following the May interest rate cut.
The announcement comes just one day ahead of the next meeting of the Reserve Bank, to decide the cash rate.
Half an hour to go!
We’re just under 30 minutes away form a decision.
Don’t go too far, we’ll bring you all the latest as it happens.
