Interest Rates: RBA remains on hold, but here’s why it’s not all good news
The Reserve Bank has put interest rates on hold for the second straight month after inflation eased – an indication that the worst may be over.
The penultimate board meeting of outgoing governor Philip Lowe chose to pause the cash rate at an 11-year high of 4.1 percent, suggesting increases may be a thing of the past.
“The higher interest rates are and will continue to create a more sustainable balance between supply and demand in the economy,” he said.
In light of this and the uncertainty about the economic outlook, the board decided again this month to keep interest rates stable.
“This gives more time to assess the impact of interest rate hikes so far and the economic outlook.”
While this was the third pause in 2023 so far, interest rates have still risen 12 times since May 2022, marking the most aggressive pace of monetary tightening since 1989.
The Reserve Bank put interest rates on hold for the second straight month after inflation eased
Outgoing Governor Philip Lowe’s penultimate board meeting chose to pause the spot rate at an 11-year high of 4.1 percent, suggesting increases are a thing of the past (he was pictured in India last month)
A borrower with an average $600,000 mortgage saw their annual repayments increase by $17,796 in just 15 months.
But the rate hikes appear to have lowered inflation, which fell to 6 percent in June, down from 7 percent in the March quarter and a 32-year high of 7.8 percent at the end of 2022.
Three of Australia’s Big Four banks – Commonwealth, Westpac and NAB – had mistakenly expected a rate hike on Tuesday, but the futures market had seen a rise as a 14 percent chance.