The RBA is expected to give Australian households an interest rate break today for the third time in recent months.
CommSec’s Tom Piotrowski said the market appears to have found some calm “for now”, which could lead to a pause in future rate hikes. “There could be a pause in rate hikes in some key jurisdictions,” Mr Piotrowski told Sky News Australia. “That’s part of the reason why the market was able to recover last week. “The question in particular is whether we can further consolidate last week’s gains.” Published by CommSec.
Dr Philip Lowe is expected to deliver good news to millions of Australians by once again leaving interest rates unchanged at 4.1% as one of his final acts as RBA Governor.
Today’s decision leaves interest rates unchanged for three consecutive months, with the last rate hike coming in June.
It would be further relief for borrowers who have endured 12 interest rate increases since May last year and are struggling to make their mortgage payments.
finder cash rate survey It also revealed that two-thirds of economists think interest rates have peaked and do not expect them to rise further.
Graham Cooke, head of consumer research at Finder, said the findings were “music to the ears of mortgage holders”.
The expected pause comes after inflation was lower than expected, and millions of Australians will have breathed a sigh of relief at the news.
The latest Consumer Price Index figures released by the Australian Bureau of Statistics show annual inflation fell to 4.9% in July from 5.4% in June.
Market expectations had predicted that inflation would fall to only 5.2% in July.
But Mr Cook said risks remained to the economy.
“Despite growing belief that cash rates have peaked, mortgage holders need to remain cautious,” he said.
“An escalating situation in Ukraine, a continued slowdown in China’s economy, or changes in inflation could lead to a hike in the RBA in the coming months.”
A third of economists predict further rate hikes by 2023, with NAB chief economist Alan Oster predicting rates will rise by a further 0.25% to reach 4.35% by the end of the year. ing.
The other three “big four” banks believe interest rates have peaked.
But views on when interest rates will start to fall and when Australian households will receive serious relief are more mixed, with economists’ forecasts ranging from March 2024 to the end of 2024.
Future interest rate decisions will be under the purview of new RBA Governor Michelle Bullock, who will take over the top job from Dr Lowe on September 18.
The government chose not to reappoint Mr Lowe as RBA governor, having given Australians the wrong guidance that interest rates were likely to remain low until at least 2024.
Research firm Roy Morgan said 1.5 million mortgage holders were “at risk” of defaulting on their mortgages as of July, and an additional 81,000 if today’s cash rate rose by 0.25%. It said households would fall into the “at risk” category.