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
Interest rate outcome set to influence election timing
Mortgage holders won’t be the only ones eagerly awaiting the Reserve Bank’s decision on interest rates.
Federal MPs will also be watching to see if a rate cut will be enough for Prime Minister Anthony Albanese to trigger an election.
While the election is not due to be held until May 17 at the latest, there is speculation the first lowering of interest rates in almost five years would lead to a national poll being called sooner than expected.
With cost-of-living issues set to dominate the election, any reduction in interest rates would be front of mind with voters, YouGov’s polling director Amir Daftari says.
“If there is a rate cut, then that might be psychological relief among voters that things are going in the right direction,” he told AAP.
How much would a rate cut save the average loan?
Borrowers could be just weeks away from mortgage relief with a long-awaited Reserve Bank of Australia interest rate cut widely expected to be handed down.
If the RBA board does lower the cash rate by 25 basis points to 4.1 per cent on Tuesday, expect the banks to pass through those savings in full to their variable home loan rates, says Sally Tindall, data insights director at financial comparison site Canstar.
For an average owner-occupier with a $600,000 loan, that would translate to a $92 reduction to their minimum monthly repayments.
“However, we could see some lenders cutting new customer variable rates even further to capitalise on what could become a refinancing revival,” Ms Tindall said.
D Day for RBA rates call as economists warn cut not certain
Experts warn an interest rate cut is not a done deal on Tuesday as millions of Australians pray for mortgage relief at the Reserve Bank’s first board meeting of the year.
The RBA’s call will also be crucial heading into the Federal Election — due by May — with Prime Minister Anthony Albanese and Opposition Leader Peter Dutton setting their economic narratives on the cost-of-living crisis.
Markets have ramped up betting that the RBA will make its first downward move since late 2020, and traders predict a 90 per cent chance of a cut.
Those hopes were boosted after core inflation slowed to 3.2 per cent in December, the slowest pace since 2021.
