The RBA has made it clear that it’s here to play the long game, as it once again holds the cash rate at 4.35%.

This is now the sixth time in a row that the RBA has held the cash rate.

And while back to back cash rate pauses are more boring than watching dressage at the Olympics, thankfully the RBA’s decision today didn’t take us by surprise.

Inflation for the 12 months to June 2023 rose 3.8%, and this was in line with the RBA’s expectation.

But, while a cash rate pause isn’t necessarily bad news, homeowners are starting to get antsy to know when the RBA will finally start dropping the cash rate.

The major banks have put in their predictions for when the RBA will first deliver its long-awaited cash rate cut. Here’s what they’re thinking:

• ANZ: February 2025
• CBA: November 2024
• NAB: June 2025
• Westpac: December 2024

There are only three more RBA meetings left in this year, so there is still time for the RBA to squeeze in a rate cut for Australians before 2024 wraps up.

We’ll have to wait and see if inflation allows that to happen.

Remind me, what happens when interest rates rise?

When the RBA increases the cash rate, the banks will almost always follow suit and raise the interest rate on your loan. 

Experts say it takes around two or three months for individuals to feel the full impact of a rate rise on their cash flow… so we haven’t felt the full impact of these past successive rises.

And your interest rate on your savings account should increase too (but often doesn’t increase to the same extent).

And why is the cash rate so high at the moment?

As recently as May 2022, interest rates were at a historic low of 0.1% and economic conditions in Australia were pretty stable. 

But with economic slowdown coming out of the pandemic, and  geo-political tensions globally, inflation has skyrocketed. The RBA has gone hardcore with thirteen cash rate increases in the past twenty two months.

Here’s what that’s looked like: