In September 2024, the Reserve Bank of Australia (RBA) announced its decision to keep the cash rate unchanged at 4.35%. This decision was influenced by the RBA’s cautious approach to managing inflation, which is currently above the targeted range of 2-3%.
Despite calls for rate cuts due to indications of an economic slowdown, the RBA has reaffirmed its commitment to achieving a sustainable reduction in inflation.
Recent data suggests a gradual decline in inflation, although not at a pace that would allow the RBA to meet its targets before 2026. Economic growth has shown signs of deceleration, and consumer spending remains subdued.
However, the labor market continues to demonstrate strength, with low unemployment rates.
Industry experts and mortgage brokers have expressed concerns about the prolonged high rates, highlighting the strain on households, particularly as consumption levels are at their lowest since 2021.
Despite this, there is anticipation in the expert community for a potential rate cut if inflation continues to trend downward. Meanwhile, many borrowers are uncertain about the possibility of relief, as the RBA has opted for a wait-and-see approach regarding future interest rate reductions.
What did the RBA say?
The RBA in its monetary policy statement for September 2024 said:
“Headline inflation is expected to fall further temporarily, because of federal and state cost of living relief. However, our current forecasts do not see inflation returning sustainably to target until 2026. In year-ended terms, underlying inflation has been above the midpoint of the target for 11 consecutive quarters and has fallen very little over the past year.”
“Sustainably returning inflation to target within a reasonable timeframe remains the Board’s highest priority. This is consistent with the RBA’s mandate for price stability and full employment. To date, longer term inflation expectations have been consistent with the inflation target, and it is important that this remain the case.”
Mortgage Broker Reaction
What If We Finance CEO, Spiro Kolokithas was quoted as saying “the challenging economic conditions, make it harder for borrowers to obtain finance suited to their needs. It is now even more important to deal with a mortgage broker and a home loan broker who is an expert in the field and can help you find finance meeting your needs as we approach the busy home loan period this is even more important to work with an expert to secure a better deal”.
Contact What If We Finance today to find out more.
