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
Surge in home loan applications across Australia
The number of Aussies seeking to borrow money to buy homes has surged in the past year, according to data from brokerage Loan Market.
Loan pre-approvals lifted 53 per cent in May compared to the same month in 2024, according to the firm.
The RBA has cut rates twice this year and a third is widely expected today.
Victorian buyers were the most active in Loan Market’s loan book, with pre-approvals for mortgages more than doubling.
Increases in other States varied:
● Queensland - 52 per cent
● NSW - 36 per cent
● South Australia - 60 per cent
● WA - 9 per cent
“Customers stood on the sidelines for the last four years as we endured the highest interest rates in a decade,” Loan chief David McQueen said.
“The cash rate has dropped 0.5 percentage points in the last five months, which has been the news people trying to upgrade or enter the market have been waiting for.
“Predictions of further rate cuts by the RBA will bring more buyers to the market.”
EDITORIAL: Cost of living still a crisis for many Australians
The Nightly editorialised ahead of today’s decision on interest rate cuts, warning the Albanese Government that the job is not done on the cost-of-living crisis:
In the lead-up to the Federal election, the cost of living was all any politician wanted to talk about.
Anthony Albanese wanted voters to believe Labor was the only party to bring some relief. The Coalition wanted to hammer home that it was under Labor that the crisis has flourished, eating away at household savings and squeezing budgets harder than they had been for decades.
But since May 21, it’s gone from an all-consuming obsession to barely a murmur.
Energy rebates which were the cornerstone of cost-of-living relief from both the Federal Government and the States are coming to a quiet end.
With inflationary pressures finally fading, it appears the Government considers it mission accomplished.
Why an interest rate cut isn’t always good news
I don’t mean to state the bleeding obvious, but if you’re a homeowner then you’ll potentially enjoy having a bit of cash left over at the end of the month.
But an interest rate cut isn’t all good news.
If you’re looking to get into the market, a rate cut can make things a bit trickier.
The reason is that when homebuyers have more purchasing power, demand - and hence prices - get pushed up.
Here’s an explainer on how this all works.
Not all economists think a rate cut is a certainty
An interest rate cut today is hotly tipped and almost an unbackable favourite.
But the view is not unanimous. Betashares economist David Bassanese yesterday said the near-certainty in markets over the looming decision was “bewildering”.
“The RBA could easily wait for confirmation of lower underlying inflation in the quarterly CPI report later this month before cutting rates again in August,” he said.
Unemployment is low and the RBA would be wary of the risk that stimulating the economy too fast could spark the return of inflation.
What have we seen from the Reserve Bank this year?
Today’s meeting is the RBA board’s fourth meeting for the year so far.
The first one, in February, saw a cut of 25 basis points to 4.1 per cent.
They elected to leave it unchanged in their March/April meeting after flagging uncertainty around the economic outlook.
On May 20, at the third meeting, they cut again to bring the rate down to 3.85 per cent.
If they cut again today, it will be the first back-to-back cuts since 2020. And we don’t need to remind you what went down that year.
How likely is it that we’ll get a rate cut?
The Reserve Bank is highly tipped to cut at 2.30pm today — and not just because local spending is soft or inflation’s easing.
As the RBA board enters the second day of deliberation, they’ll be sweating on Donald Trump’s fresh round of tariffs, including 25 per cent on key Australian trading partners Japan and Korea.
A messy, drawn-out trade war was a key concern at the last RBA meeting in May, something Assistant Governor Sarah Hunter said could “structurally alter the world economy”.
At its last meeting, the RBA ran through a bunch of scenarios: one where things stay mild, one where the worst is avoided, and one where a full-blown trade war sends everything south.
That worst-case scenario includes higher prices for imports, broken supply chains, nervous businesses pulling back on investment, and a hit to confidence across the board.
With components of complex goods like cars sourced across multiple countries, the danger is tariff-induced bottlenecks, pushing up prices at the same time as global demand is going soft.
That’s the kind of squeeze central banks hate: weak growth and rising costs.
And then there’s the uncertainty.
Welcome
Hello and welcome to the day when mortage holders across Australia hold their collective breaths.
We’ve had two interest rate cuts from the last three Reserve Bank board meetings, providing some much needed relief at a time when the cost-of-living crisis continues to put pressure on households.
And the experts reckon we could be in for a third today.
It’ll be the first time we’ve had back-to-back cuts since the pandemic if it happens.
We’ll find out for certain at 2.30pm AEST. Stay with us for all the latest.
