RBA Holds Rates Steady, Shocking Markets and Shifting Economic Expectations
RBA Holds Rates Steady, Shocking Markets and Shifting Economic Expectations
0
The Reserve Bank of Australia (RBA) has decided to keep the official cash rate steady at 3.85%, taking many by surprise after expectations of a 25-basis-point cut had built up in financial circles.
This unexpected move comes amid recent data indicating easing inflation and weaker than anticipated economic growth, conflicting with prior predictions of a cut.
Anne Flaherty, Senior Economist at REA Group, noted the central bank's decision countered widespread expectations. She remarked that while most forecasters still predict rate reductions later in the year, holding the rate might slow the pace of property price growth experienced after cuts earlier this year. With prices up nationally by 3.2% so far this year, budget constraints remain a challenge for many Australians grappling with affordability issues.
Dwyfor Evans of State Street Markets viewed the RBA's decision as surprising but justifiable, noting the strong labour market alongside a balanced perspective on inflation. He highlighted uncertainty surrounding demand and supply influences, with a renewed vigour in the housing market providing significant reasons for the RBA's pause.
Krishna Bhimavarapu, from State Street Investment Management, expressed perplexity over the decision, emphasising signs of weak economic momentum. With high household debt burdening Australian consumers, he anticipates a possible sharper rate cut could occur as early as August, potentially reaching a cash rate of 3.10% by December.
Adam Bowe at PIMCO asserted that despite holding the rate at 3.85%, the RBA is likely to continue its easing trajectory. He underscored that the unchanged policy rate, amid restrictive monetary conditions, suggests a strategic pause while ensuring inflation remains within the targeted range. External factors such as geopolitical tensions and trade barriers are expected to contribute to a deeper rate reduction cycle, potentially bringing the cash rate below 3.0%.
In a recent discussion, James O'Reilly, Director and Financial Planner at Northeast Wealth, underscored the benefits that could come from granting financial advisers access to the Australian Taxation Office (ATO) portal. Speaking on The ifa Show, O'Reilly proposed that this access would significantly simplify the services financial advisers provide to clients, particularly at tax time and the end of the financial year (EOFY). - read more
The Reserve Bank of Australia (RBA) has decided to keep the official cash rate steady at 3.85%, taking many by surprise after expectations of a 25-basis-point cut had built up in financial circles. This unexpected move comes amid recent data indicating easing inflation and weaker than anticipated economic growth, conflicting with prior predictions of a cut. - read more
The Reserve Bank of Australia (RBA) is anticipated to maintain its trajectory of incremental interest rate reductions, according to insights from leading financial analysts at ANZ. Recent data from the ANZ-Indeed Australian Job Ads series revealed a rise from 114.8 in May to 116.9 in June, suggesting a potential rebound in job advertisements after previous declines. Despite a stable unemployment rate and hours-based underutilisation rate since mid-2024, the Australian labour market remains strained. - read more
As a first-time borrower, understanding the importance of budgeting is crucial. Effective budgeting can make all the difference in achieving financial stability and meeting your financial goals. It helps you manage your income, control your spending, and save for future needs. - read more
Applying for a loan can be a daunting process, filled with numerous requirements and potential pitfalls. However, avoiding mistakes is crucial to boost your chances of approval and secure the best possible terms. Making errors during your application can lead to unnecessary delays, higher interest rates, or even denial. - read more
Financial hardship occurs when an individual is unable to meet their financial obligations due to a variety of circumstances. This could stem from a loss of income, unexpected expenses, or rising living costs that outweigh financial resources. - read more
Maintaining a good credit score is crucial for financial health. In Australia, a solid credit score can unlock better interest rates, higher credit limits, and improve your chances of loan approval. - read more
Understanding what a credit score is and its importance is crucial for anyone seeking a personal loan. A credit score is a numerical representation of your creditworthiness, typically ranging from 0 to 1200 in Australia, provided by credit reporting agencies. - read more
Before considering a loan application, it's crucial to have a clear understanding of your current financial position. Start by noting down all sources of income, including salary, any additional earnings, or government benefits. This will give you a comprehensive view of your financial inflows. - read more
Need Help Finding a Loan?
Find out now if you qualify and compare
rates, offers and options from multiple lenders - without a credit check!
All finance quotes are provided free (via our secure server) and without obligation. We respect
your
privacy.
Knowledgebase
Asset-Backed Security (ABS): A financial security backed by a pool of assets, such as loans, leases, credit card debt, royalties, or receivables.
