RBA keeps rates on hold, experts split on when cuts will start

The Reserve Bank has kept the official cash rate on hold at 4.35% for the third month in a row, which was widely anticipated by the market.

The Board came to the decision after signs the economy is slowing. The unemployment rate came in above the much-anticipated threshold of 4% for the first time in two years, at 4.1% in January, seasonally adjusted.

At the same time, wages growth (led by public sector salaries) has climbed higher. 

In a sign the central bank is done with rate hikes, the decision statement has taken a clear shift in tone.

"The path of interest rates that will best ensure that inflation returns to target in a reasonable timeframe remains uncertain and the Board is not ruling anything in or out... The Board remains resolute in its determination to return inflation to target." 

Notably, the rest of that sentence 'and will do what is necessary to achieve that outcome' does not appear in the statement.

PropTrack senior economist Eleanor Creagh said it's likely the cash rate has peaked in the current tightening cycle.

“This sustained pause reflects the continued easing of inflation pressures while the economy, businesses, and consumers are adjusting to the full impact of significant interest rate tightening delivered since May 2022," Ms Creagh said.

Ms Creagh said it's likely the central bank will begin to cut rates in the second half of the year.

“Looking ahead, the next move for interest rates is likely to be down. Despite a weaker outlook for the economy, the positive tailwinds for housing demand and a slowdown in the completion of new homes are likely to offset the impact of reduced affordability and a slowing economy.

"As a result, prices are expected to lift further in the months ahead, particularly while the expectation remains that interest rates will move lower in late 2024.”

Economists at Westpac and Commonwealth Bank are in agreement the next rate cut will be in September, while those at NAB and ANZ believe it will be November.

However, more hawkish market watchers are now suggesting there will be no cut to the cash rate until 2025. 

Buying a home or looking to refinance? The table below features home loans with some of the lowest interest rates on the market for owner occupiers.

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Lender	Home Loan	Interest Rate	Comparison Rate*	Monthly Repayment	Repayment type	Rate Type	Offset	Redraw	Ongoing Fees	Upfront Fees	Max LVR	Lump Sum Repayment	Additional Repayments	Split Loan Option	Tags	Features	Link	Compare	Promoted Product	Disclosure
loans.com.au	loans.com.au Variable Home Loan (LVR < 90%)	6.04% p.a.	6.06% p.a.	$3,011	Principal & Interest	Variable			$0	$530	90%				4.6 STAR CUSTOMER RATINGS	Available for purchase or refinance, min10% deposit needed to qualify. No application, ongoing monthly or annual fees. Dedicated loan specialist throughout the loan application.	More details	Compare	Promoted	Disclosure
Unloan	Unloan Variable Rate Home Loan LVR < 80%	5.99% p.a.	5.90% p.a.	$2,995	Principal & Interest	Variable			$0	$0	80%					A low-rate variable home loan from a 100% online lender. Backed by the Commonwealth Bank.	More details	Compare		Disclosure
Macquarie Bank	Macquarie Bank Basic Home Loan (Owner Occupier, Principal and Interest, max 60% LVR)	6.14% p.a.	6.16% p.a.	$3,043	Principal & Interest	Variable			$0	$350	60%					Get a tailored quote in as little as 3 minutes Complete your application in 15 minutes	More details	Compare		Disclosure

_{Photo by Neil Thomas on Unsplash}