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The Reserve Bank handed down its July monetary policy decision on Tuesday (8 July).
Subverting expectations, the board elected to hold the cash rate at 3.85 per cent, with six votes in favour and three against.
While this may have some believing an August cut is all but guaranteed, the lesson to be learnt from the recent decision is not to count your chickens before they hatch, said Accendo Financial’s founding partner Trent Carter.
Already, there are economists weighing in on the upcoming August meeting.
“Looking ahead we expect the RBA Board will decide to cut the cash rate in August,” said Adam Boyton, head of Australia economics at ANZ.
“We anticipate the RBA to cut the cash rate in August by 25 basis points, with November the most likely option for a follow up rate cut,” said Belinda Allen, senior economist at CBA.
“The RBA has maintained the official cash rate target at 3.85 per cent in July, making an August rate cut almost certain,” said Cotality’s head of research, Eliza Owen.
While optimism is welcome, avoiding false hope should also be considered.
If the July announcement reinforced anything, it is to expect the unexpected.
Others recognised the position the market is in. “Uncertainty” has been the buzzword of 2025, with tensions in the Middle East, ongoing global trade dramas, and inflationary pressure all playing a role in this.
With the RBA coming forward following the July decision and citing uncertainty as a key reason behind the hold, this is likely to continue.
Westpac chief economist Luci Ellis was a little more reserved in predictions, claiming an August rate cut is far from a “shoo-in”.
“Given the lingering uncertainties and the RBA’s concerns about a tight labour market, expect its post-meeting language to be non-committal, even a little grudging about the decision to cut,” she said.
Brokers beware
I recently had a broker tell me they were servicing a client and guaranteed there would be a July rate cut, doing as many others did and taking economists’ word for it.
The embarrassing situation arose where the decision was to hold and they had to break the news to the disgruntled client.
This can be avoided by erring on the side of caution when discussing upcoming rate moves.
As discussed in an upcoming episode of Finance Specialist, Carter urged brokers to make borrowers understand that, in the end, a 25-basis-point cut won’t make much of a difference.
He said an interest rate cut “shouldn’t be making the yes or no decision on whether to act on anything because fundamentally it’s not that big a savings in terms of affordability.”
Carter said borrowers realistically need to be prepared for another 2–3 per cent increase in rates to account for any market shifts, similar to a rainy day fund.
Liberty Network Services CEO Daniel Marsi said brokers play a “vital role in offering clarity, confidence, and timely solutions” and, while the hold may be disappointing to some, borrowers will continue to remain active as inflation and cost-of-living pressures ease.
Prospa’s general manager of sales and partnerships, Roberto Sanz, echoed these sentiments, urging businesses to take the time to reassess opportunities.
“For many businesses, this pause means they can plan for a more conservative market, manage their cash flow more efficiently, and evaluate growth opportunities with greater accuracy,” said Sanz.
[Related: ‘If they’re unsure, they hold’: Industry reacts to controversial rate decision]
