RBA keeps cash rate on hold as the race to stop inflation nears finish line
With inflation finally hitting the top of the Reserve Bank's target band, a rate cut today would be jumping the gun.
The Reserve Bank of Australia held the cash rate at 4.35% at its meeting today. This came as no surprise to the experts Finder surveyed: 100% of them called this one.
The main reason for the hold: inflation is still too high. While inflation has slowed to 2.8%, which is just inside the RBA's target range of 2-3%, part of this is because of temporary energy bill relief. Take that away and inflation would still be too high for comfort.
"ABS data shows that underlying inflation remains higher than desired, and the labour market recorded a strong rise in employment in September, which could put upward pressure on inflation," says Mortgage Choice CEO Andrew Waldron.
QUT's Noel Whittaker says "There is no evidence that Australia is getting inflation under control."
And so the RBA is keeping the cash rate where it is, fearing that to cut now would only keep inflation high.
But inflation is coming down, albeit slowly, and we should get within the target band sometime next year. And a cut can't come soon enough. 47% of Australian borrowers tell Finder they're struggling to pay their home loans at the moment.
Struggling with high interest rates?
If you're one of those borrowers struggling right now there are a few steps you can take:
- Review your spending and cut back where you can. Easier said than done, but it's always worth looking around for areas where you're spending more than you need to.
- Check your home loan's interest rate. You don't have to wait for the RBA to cut rates. Lenders offer better deals to new borrowers all the time. Check your current home loan rate and see how it stacks up to the competition.
- Ask your lender for a discount. Once you know better deals are out there you can simply call your lender up and ask if they can match to a better offer or at least lower your rate. And if they don't...
- Refinance. Switch to a new, lower rate and decrease your repayments.
Compare home loan rates now to see if you're on the best rate available.