RBA Expected to Maintain Current Interest Rate Amid Economic Jitters
RBA Expected to Maintain Current Interest Rate Amid Economic Jitters
1
The information on this website is general in nature and does not take into account your objectives, financial situation, or needs. Consider seeking personal advice from a licensed adviser before acting on any information.
Tuesday's meeting of the Reserve Bank of Australia (RBA) is anticipated to maintain the current cash rate at 4.35%.
However, borrowers are being advised to brace themselves for possible future rate hikes as the board remains cautious about future economic shifts.
According to Gareth Aird, Head of Australian Economics at Commonwealth Bank, the rate is likely to stay the same for now, but the RBA’s stance might still be open to future changes based on evolving economic data. "We expect no changes to the cash rate but the board will likely state that it remains vigilant on potential inflationary pressures," Aird predicts.
Should Aird's projections hold true, the RBA would keep the rate at a 12-year high, aiming to bring inflation down to its 2-3% target by mid-2026.
"The likelihood of a rate change is minimal," Aird noted, stressing that RBA Governor Michele Bullock usually echoes the same sentiment about remaining alert to inflation risks while acknowledging GDP growth uncertainties.
Relief washed over Australians on Wednesday when the Consumer Price Index (CPI) for June revealed a slight increase from 3.6% to 3.8%, which, while still higher than RBA's goal, aligns with their forecasts. More crucially, the core inflation rate-or the trimmed mean CPI-dipped slightly from 4% to 3.9%.
The quarterly August Statement of Monetary Policy, to be released concurrently with the cash rate announcement, includes the federal government’s $300 energy rebate. Stephen Wu of CommBank suggests this could potentially lead the RBA to revise headline inflation figures downward, while predictions for the underlying CPI would likely remain static.
"The statement will probably reaffirm that the path for interest rates remains uncertain," Wu wrote, acknowledging any favorable inflation data would still keep the existing narrative intact and deter immediate changes in policy.
This cautionary approach persists despite predictions from some economists about a possible rate decrease before Christmas. Financial services website RateCity has advised borrowers to acquaint themselves with the prospect of another rate hike, given the stubborn nature of inflation.
RateCity’s research director, Sally Tindall, highlighted that even a modest rise of 25 basis points would add approximately $75 to monthly payments on a $500,000 mortgage, accumulating to a total of $1,285 in increased payments since May 2022.
For instance, those with a $750,000 mortgage would face monthly increases of around $112, pushing the total rise in payments to $1,928 during the same period.
"This scenario aligns well within the RBA’s planned timeline but also underscores the urgency should inflation rates not decline soon," Tindall said, urging vigilance and preparedness among borrowers.
Treasurer Jim Chalmers has avoided making specific predictions ahead of Tuesday’s RBA decision, despite acknowledging that the recent inflation readings showed encouraging signs amid continuing cost-of-living challenges.
Shadow Treasurer Angus Taylor, meanwhile, has criticized the government’s spending habits, blaming increased government expenditure for feeding inflation. "The government must complement the RBA’s efforts by controlling fiscal policy, and their failure to do so leaves Australia lagging behind other G10 countries," he said.
For ongoing updates, you can visit the original publication on TheIntercept.com.
Published:Monday, 5th Aug 2024 Source: Paige Estritori
Please Note: If this information affects you, seek advice from a licensed professional.
Harley-Davidson, the iconic American motorcycle manufacturer, is reportedly in discussions to sell a stake in its financing unit, Harley-Davidson Financial Services (HDFS). This move could have significant implications for motorcycle financing options available to consumers. - read more
Peter Stevens Motorcycles, a cornerstone of Australia's motorcycle retail industry since 1970, has entered voluntary administration, revealing debts exceeding $65.9 million. This development casts uncertainty over the future of the company's 400 employees and its extensive customer base. - read more
The Australian Securities and Investments Commission (ASIC) has recently conducted a comprehensive review of the motor vehicle finance sector, uncovering significant issues that have raised concerns about consumer protection and industry practices. - read more
In a significant development for the motorcycle industry, KTM AG has successfully secured €600 million in funding, enabling the company to fulfill its restructuring plan and stabilize its financial position. - read more
Riding a motorcycle is an exhilarating experience, especially for female motorcycle enthusiasts who enjoy the thrill of speed. However, choosing the right motorcycle for speed is crucial to ensure a safe yet thrilling ride. - read more
The thrill of the open road, the rush of wind past your helmet, and the sense of uninhibited freedom—all of these are sensations associated with owning your very own motorcycle. The desire to experience this liberty is what drives many to consider the purchase of their first bike. However, the journey to becoming a motorcyclist involves more than just selecting a machine that looks and feels good; it requires a thoughtful approach to the budget and cost of ownership. - read more
A credit score is a numerical representation of an individual's creditworthiness based on their financial history, payment habits, and level of existing debt. It plays a crucial role in determining loan eligibility and interest rates for various financing options, including motorcycle loans. - read more
For many, experiencing the allure of the open road on two wheels isn't just about the destination; it's about the journey itself. Motorcycling represents freedom, a sense of adventure, and an expression of personal style. However, as with any significant purchase, it's crucial to approach the financing of your dream bike with as much enthusiasm as you do when selecting the make and model. - read more
Start Here
Knowledgebase
Interest Rate: A rate which is charged or paid for the use of money. An interest rate is often expressed as an annual percentage of the principal. It is calculated by dividing the amount of interest by the amount of principal. Interest rates often change as a resul
