RBA interest rates live updates: Reserve Bank hands down long-awaited interest rate cut to Aussie homeowners
And that, folks, is a wrap!
In case you missed it, the Reserve Bank today handed out a long-awaited interest rate cut for suffering Aussie homeowners.
The cash rate was cut from 4.35 per cent - where it has been wedged solid since November 2023 - to 4.1 per cent.
Within 20 minutes of the welcomed decision, all four of the big four banks said they would pass on the full cut to variable rate customers. On a mortgage of $600,000, that’ll be an immediate $92-a-month saving when the new lower rates take effect towards the end of the month.
So, the big question now is: Will we get more?
That’s the million-dollar question. RBA governor Michele Bullock highlighted the strength of the labour market when she faced the media after the rates decision and said it would be a crucial factor considered before there’s any further cuts this year.
Market watchers, who had priced in a reduction - but had showed some signs of hesitation early today about whether the board would actually go through with it - will be adjusting their models overnight and we should hear more tomorrow on their forecasts for the rest of the year.
Some are already banking on two more cuts that will take the official cash rate to 3.6 per cent by December.
And that’s where it could stay, with Bullock warning those who reaped massive rewards with record low interest rates during the pandemic that the cash rate would be returning to a more neutral setting.
But, in this day and age, a saving’s a saving.
Use it wisely.
Thaks for joining us today.
And for all the news on what you may have missed, what it means for your budget and your mortgage, what it means for the timing of the Federal election and what the experts are saying, check out the feed below ...
Key Events
More cost-of-living relief in the Budget?
The Treasurer is keeping mum on what measures might be in the works for the Budget (or election campaign), but says Labor’s focus is on making life easier for Australians.
“From Budget to Butdget, we see what we can see responsibilty to do to help people with the cost of living, that’s been a feature of the first three budgets,” he says.
“And if we can afford it, it will be a feature of the fourth.”
Aussie market down after rates call
The S&P ASX200 is still down after the Reserve Bank announced its first rate cut in more than four years.
All but two of the 11 sectors were in negative territory at 12.10pm. Energy, banks, consumer discretionary, mining and real estate stocks were all down.
Health care and IT eked out small gains.
The index was trading down 0.5 per cent at 8491.1.
Will this mean an election gets called soon?
The decision to cut rates has heightened speculation Prime Minister Anthony Albanese could rush to Government House to capitalise on the good news.
April 5 and April 12 are dates heavily favoured in Canberra.
Treasurer Jim Chalmers is asked if the decision will mean those dates are in play - but he says he’s still working towards a March 25 Budget.
(If Mr Albanese calls an April election, there will not be a Budget. If the PM waits until May, there will be one).
“We’ve been in the cabinet suite next door for most of today and most of yesterday preparing for and planning for a Budget on 25 March,” he said.
“That’s what we’re working towards. We acknowledge the timing of the election is a matter for the Prime Minister, in consultation with his senior colleagues.
“But we’re working towards that Budget.”
‘There’s more work to do’ Treasurer acknowledges
Dr Chalmers says the rate cut isn’t mission accomplished, and that there’s more work to do.
“We cannot be complacent about the months and years ahead. We know that there’s more work to do,” he said.
“We know that this is not the solution to every challenge... but it will help. It’s a welcome step.”
For a $500,000 mortgage, the rate cut will save households about $80 a month or $960 a year, the Treasurer says.
Chalmers: Rate cut the soft landing we’ve been preparing for
Treasurer Jim Chalmers is speaking in Canberra.
He reiterates the Reserve Bank’s decision to cut rates is very welcome news for milions of Australians, relief he says is “needed and deserved”.
The Labor Government has given the RBA the necessary foundation to make the first cut since 2020, he says.
“Under this Labor Government, inflation is down, wages are up, unemployment is low, and now interest rates are falling as well,” he said.
“This is the soft landing that we’ve been planning for and prepapring for, but we cannot be complacent about the months and years ahead.”
Much-hyped rate cut will renew speculation of early election
A long-awaited reprieve in interest rates may tempt Prime Minister Anthony Albanese towards calling an earlier election but he would be wiser to wait.
The Reserve Bank of Australia delivered long-awaited relief for mortgage payers – and embattled politicians – on Tuesday by cutting the official interest rate by 25 basis points to 4.1 per cent, marking the first reduction of the cash rate since 2020.
The first lowering of interest rates in almost five years will reignite speculation of a Federal poll being called before the final deadline of May 17.
Rumours of an election on April 12, or as early as April 5, have already been rife.
The lower rate offers the tentative solace of an easing economic climate that may give Labor a lift in the polls.
Read Nicola Smith’s full analysis here.
How much will you save?
It’s a belated Christmas Day for anyone with a mortgage! At last, after the harshest interest rate-hiking cycle in a generation, there’s finally a reason to rejoice.
After more than a year of holding the official cash rate at 4.35 per cent, the Reserve Bank just mintes ago said it would cut by 25 basis-points to 4.1 per cent.
So, how much will that put back in your pocket?
Read more here ...
What now?
The RBA has delivered its statement on today’s rate cut decision but governor Michele Bullock will front the press pack in just over 30 minutes to answer questions.
You can be sure the first will be: “So, when’s the next one?”
We’ll hear more about the board’s thinking and why it decided now was the right time to cut.
Stay tuned.
‘Very welcome news’: Treasurer responds to rate cut
Treasurer Jim Chalmers is due to stand up in Canberra in about 20 minutes, but he’s put out a statement responding to the RBA’s decision to cut rates to 4.1 per cent.
He said the news would be “very welcome” for millions of Australians, who are getting the rate relief they “need and deserve”.
He acknowledges it won’t solve every problem in the economy or in household budgets, and that the mission isn’t accomplished - but it will help.
“Today’s result is a demonstration of the substantial and sustained progress we’ve made on inflation together,” he said.
“Under Labor, inflation is down, wages are up, unemployment is low and now interest rates have started to come down too.”
Major banks follow rate cuts with mortgage drops
All four of the major banks have dropped their variable rates as they moved quickly to push through the 0.25 per cent cut in full.
NAB, Westpac and CBA were quick out of the gates, offering mortgage holders a reprieve, with ANZ following moments later.
“We are very pleased to deliver this rate cut to home loan customers - we understand how tough it’s been for many Australians,” said Ana Marinkovic of NAB’s personal bank said.
“The extended period of high interest rates has placed real strain on household budgets and this rate reduction will help to ease the financial burden.
“We wanted to move quickly after the RBA’s decision to provide customers with certainty.”
