The Reserve Bank of Australia has left millions of borrowers a little more relaxed for their summer holidays, keeping interest rates on hold.
Having responded to stronger-than-expected quarterly inflation figures by lifting the cash rate to 4.35 per cent in November, the RBA has used softer-than-expected monthly inflation data as an excuse to sit tight in December.
With no meeting scheduled for January, borrowers should be safe from further rate rises until at least February.
Since May 2022, interest rates have risen 4.25 percentage points, adding more than $1200 a month to repayments on a $500,000 home loan with a 25-year term.
RateCity said a borrower with a $500,000 loan who had not refinanced to a cheaper rate would have paid almost $25,000 in extra interest payments over the past 20 months as a result of the rate increases.
Prediction for next year
Westpac chief economist Luci Ellis, who until October was the RBA’s assistant governor (economic), believes there is a good chance the next move in rates will be down.
“There’s a range of different pieces of data that are suggesting the Reserve Bank doesn’t necessarily need to go again,” she told The Business ahead of today’s RBA meeting.
“We do believe that if they are surprised on the upside by inflation in the December quarter, then they’ll raise rates again in February.”
The December quarter inflation figures come out on 31 January, just ahead of the RBA board’s next meeting on 5 and 6 February.
It is the first time the RBA will hold a two-day board meeting, as part of the changes recommended in a sweeping review this year. The interest rate decision will still be announced at 2.30pm on Tuesday, 6 February.
In another first, the RBA will start holding scheduled press conferences an hour after the rates decision is announced.
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