What’s changing with the RBA and their interest rate decisions?

RBA Feb 24 Cash Rate Decision

The Reserve Bank kept the cash rate steady in February. However, a change to the RBA’s 2024 meeting schedule has commentators theorising about how this will impact interest rates changes this year.

The RBA’s decision to keep the cash rates on hold at 4.35% earlier this month wasn’t unexpected, given the latest inflation data.

Because after months of steadily rising living costs, inflation seems to be finally heading south, currently at 4.1% down from 7.8% in December 2022.

Reduced inflation is exactly what the RBA has been trying to achieve with the recent rate hikes. Only time will tell whether the rate hikes have done their job, or whether further rate intervention will be required.

So when will the RBA make another cash rate decision?

Instead of the RBA meeting monthly to decide the fate of the cash rate, this year, the RBA will only meet 8 times.

Specifically, RBA cash rate decision will be announced on:

– February 6
– March 19
– May 7
– June 18
– August 6
– September 24
– November 5
– December 10

How might fewer RBA meetings impact borrowers?

Some commentators believe fewer RBA meetings will lead to fewer rate changes. Others believe it will lead to more significant rate changes, due to the fact the RBA have less opportunities to change rates.

And of course, we may also start to see lenders changing their rates independently of the RBA’s cash rate decisions. Especially as lenders continue to report reduced profit margins on their residential lending activities.

So, are interest rates expected to fall? And if so, when might that happen?

While the February rate pause was welcomed, the RBA also cautioned that further rate hikes “cannot be ruled out”, especially if inflation starts to climb again.

Despite this warning, plenty of lenders (like NAB, CBA and Westpac for example) have advised they’re expecting to see interest rates fall this year.

Trying to predict rate movements is difficult though. As we’ve seen play out over the last 18 months, a lot can happen in a short amount of time.

The “experts” get it wrong.

Those responsible for actually setting the rates get it wrong.

So what hope do we have as everyday borrowers to accurately predict what will happen to our monthly home loan repayments?!

Action for you:

As always, we’re big advocates of directing our energy towards things we can actually influence or control.

So if you haven’t done so already, this means you should take some time to ensure your loan – and the rate you’re currently paying – is still the most suitable option for you.

We can help you with this.

You can get started here.