Inflation eases, but rate relief remains distant

Inflation Eases, But Rate Relief Remains Distant

Mark Stevenson, Managing Director at Bell Partners Finance (now Evolve Lending & Finance), was featured in Australian Broker News in November 2024 as fresh inflation data showed Australia’s annual CPI rate falling to 2.8%, the lowest level in three and a half years, yet experts pointed to 2025 as the earliest realistic window for an RBA rate cut.

The quarterly increase came in at just 0.2%, the smallest rise since early 2021, and the headline figure was now sitting within the RBA’s 2% to 3% target band for the first time in years. On the surface, it looked like the conditions for a rate cut had arrived. But the detail told a more complicated story. Government energy subsidies had played a meaningful role in suppressing the number, and with an election approaching, questions about whether those subsidies would be extended added uncertainty to the outlook. Underlying inflation, which strips out such distortions, remained elevated, and housing costs including rent and construction continued to push upward.

Mark acknowledged that while the global trend toward rate cuts was intensifying, with New Zealand and other Western nations already reducing rates, Australia’s strong employment market gave the RBA cover to remain cautious. His read was direct: the mood for a cut was building, but mortgage holders should prepare for the wait to extend into next year. The upcoming holiday spending season, including Black Friday and Christmas, would give the RBA another data point on whether demand-driven inflation was truly under control.

Banks had begun moving on fixed-rate products, a signal that they were positioning ahead of expected RBA action, but Mark’s message was that borrowers should not read that as confirmation of an imminent cut in the cash rate.

If you are reviewing your home loan options heading into the new year, contact Evolve Lending & Finance to find out what is available to you.