The RBA has chosen to keep the peace this month after it once again held the cash rate at 4.35%.

And while we’re yet to celebrate a cash rate cut, this is now the fifth time in a row that the RBA has held the cash rate. That means luckily, no additional pressure for homeowners.

Today’s RBA announcement hasn’t come as a surprise (thankfully), as inflation has been steady, and unemployment has also dropped to 4%, which was in line with the RBA’s expectations.

But that doesn’t mean economists haven’t been twitching in their seats.

Especially as Stage-Three tax cuts will put money in the wallets of most working Australians during tax time. Also, there were some new cost-of-living measures were announced in the Federal Budget a few weeks ago.

Economists weren’t sure how the RBA would react to this information. After all, you never really know when they could throw a curveball!

Now the question on everyone’s mind is when will the RBA cut the cash rate?

We hate to be the bearers of bad news, but it doesn’t look like it’ll be anytime soon. 

Three of the big four banks, Commbank, NAB, and Westpac are predicting that we’ll be graced with one cash rate cut before the end of the year.

But ANZ is going against the grain and doesn’t reckon we’ll be celebrating a rate drop until 2025.

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.

‍