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In an unexpected move, the RBA held rates steady at today’s meeting.
After a cut in February, a hold in April, a cut in May, and now another hold, the patterns have continued, despite most economists penning a 25bps cut in July.
With inflation at the lower end of the RBA’s coveted 2 per cent – 3 per cent range, sitting at 2.4 per cent, all four major banks and plenty of other economists expected some relief.
Industry heads have since come forward and noted this decision to hold doesn’t mean further cuts aren’t on the horizon.
Mortgage Choice CEO Anthony Waldron said borrowers will be disappointed by the decision but should remain hopeful as further cuts "aren't off the table."
“There are four monetary policy board meetings still to go this year, so rates could drop further," he said.
In its announcement, the Reserve Bank said "uncertainty" continued to influence decisions. "Maintaining price stability and full employment is the priority" said the RBA.
Stryd founder and CEO Ruth Hatherly said borrowers should still take the opportunity to review rates and Connective’s executive director Mark Haron said borrowers will remain active as they anticipate further rate cuts.
Haron said there is potential for one or two more rates by the end of the year if inflation continues to moderate.
While the Reserve Bank bucked the trend at this meeting, the August meeting could still see some action.
If the June quarter inflation figures put the consumer price index (CPI) within the RBA's target range, borrowers should expect cuts.
The tight labour market would have played heavily into the decision to hold, said Waldron. “Volatile” monthly CPI data is also a key reason, he added.
“The Reserve Bank will likely place more importance on the quarterly CPI figures, which will be released on 30 July, as it considers another cut to the cash rate,” Waldron said.
