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RBA cautiously leaves interest rates on hold May 2024

RBA interest rates on hold

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The RBA has cautiously left interest rates on hold at its May 2024 meeting. The cash rate has remained on hold at 4.35% pa. Interest rates have not increased since October 2023.

Inflation is not falling fast enough

The RBA has made it clear that inflation is not falling fast enough. The Consumer Price index (CPI) had  reported a headline inflation rate of 3.6% for the March quarter down from 4.1% as reported in the December quarter.

Underlying inflation (the RBA, see this as a more reflective and true measure of inflation think of it as a measure of inflation allowing for spikes) was higher than the reported rate largely due to inflation with services, for example haircuts, professional services and the rate of increase for these items is higher only moderating slightly.

Households are feeling the impact

Interest Rates On Hold - May

 

RBA Governor, Michelle Gibbons stated the current conditions due to inflation a very restrictive on households and causing pain for budgets. The RBA said “But it’s true that it’s much more restrictive on the household sector we think than, particularly on the big, big end of business.”

The RBA remains cautious and non comital

The RBA  remain cautious with regards to interest-rate outlooks they are not committing to a rake up or rate rise and watching everything carefully because circumstances can change very quickly.

Effectively should inflation begin to increase again the RBA will not rule out rate rises but equally they may also decrease rates if economic outlook improves.

The RBA said “We’re not ruling anything in or out because things are uncertain.”

In fact, the RBA board discussed the possibility of rising interest-rate’s, but ruled that out based on current economic data so the news for a home loan borrowers is nothing is certain and as mortgage broker What If We Finance advises watch this space things can change quickly!

There is a sliver living for Home Loans

Mortgage Broker Melbourne, What If We Finance advises there is a silver lining for home loans. Interest-rate not increased and remained on hold and banks are continuing to compete for your business. So using a mortgage broker is the best thing to do to find out what the best possible rate on the market is. What If We Finance recently refinanced a home loan at 5.85% and in the previous bank was offering 6.4% per annum. This was a significant saving of $7000 per annum.

Given the current uncertainty, it makes sense to contact your mortgage broker and find an unbeatable deal on your home loan

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