RBA keeps the cash rate on hold in September

The RBA holds the cash rate at 4.1 per cent in September and economists believe interest rates could come down from early 2024.

Transcript

00:00 The RBA has decided to hold the cash rate again for the third month in a row at 4.1%.

00:05 So Adrian, what was the decision behind that call?

00:09 Okay, so there were a few factors that factored in that decision. One was that

00:14 inflation is coming down. The latest month we figured had it going down, growing at 4.9%,

00:22 which is a long way from where it was at the end of last year when it was above 7%.

00:27 Human spending has gone down very significantly and the Reserve Bank seems to feel more confident

00:37 that inflation is on the path to coming back within its 3% target band, which it wants to

00:45 get there by the middle of 2025. Brittany, what will this decision mean for Homebuyers?

00:51 Well Adrian, I think Homebuyers are still really feeling the pressure of the previous interest rate

00:55 rises. Recent data from Roy Morgan suggested that 1.5 million Australians are now at risk of mortgage

01:02 stress and that's a level we haven't seen since 2008 in the global financial crisis. So the other

01:08 thing that we're seeing is that Homeowners are looking for a better deal. So the latest ABS

01:13 lending indicators showed that the value of refinancing had hit a record level as well in

01:18 July and that was $21.5 billion worth of refinancing. So Homeowners are stressed, they're looking for

01:26 better deals and I guess we'll have to see what happens for the rest of the year.

01:31 Yeah, well on that, it looks like there's a lot of speculation about whether this is a peak of

01:37 interest rates or whether the RBA might move again, either another rate rise or maybe even a rate cut

01:45 in the future. At this stage the money is on the rates staying where they are for quite some period

01:51 of time until at least early next year. There is an outside chance of one more rate hike but

01:58 a lot of economists think that is highly unlikely at this stage. The more likely scenario is extended

02:07 rate pause and people thinking about rates coming down from early to the middle of next year.

02:15 So possibly some good news for Homeowners ahead of Christmas with just a few more months to go.

02:20 Possibly. Fingers crossed.

02:22 Yeah.

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