One year on – cash rate holds at 4.35%

One Year On – Cash Rate Holds at 4.35%

Mark Stevenson, Managing Director at Bell Partners Finance (now Evolve Lending & Finance), was featured in Broker Daily as the Reserve Bank delivered another hold on Melbourne Cup Day 2024, marking exactly one year since the cash rate was last moved and dashing hopes that the board might deliver a long-awaited cut on its most famous decision day.

Ahead of the announcement, Mark had anticipated the hold. While headline CPI had fallen to 2.8% and was now sitting within the RBA’s 2% to 3% target band for the first time in years, underlying inflation measured by the trimmed mean remained at 3.5%. Mark noted that although the direction of inflation was encouraging, underlying pressures were still higher than the RBA would like, and borrowers would need to stay patient. His pre-decision view was clear: with the mood for a cut intensifying globally, it seemed more likely the RBA would keep mortgage holders waiting until at least the first quarter of 2025.

The board’s own statement confirmed that assessment. It cited the temporary nature of the decline in headline inflation, attributing part of the fall to government energy subsidies rather than sustained reduction in underlying demand. Sustainably returning inflation to the midpoint of the target range remained the board’s highest priority, and its forecasts suggested it would be “some time yet” before that milestone was reached.

Mark also flagged a note of caution for borrowers looking at fixed rates as major banks began cutting their fixed-rate products ahead of an anticipated RBA move. Those cuts could still leave fixed rates above variable rates in the longer term, making careful analysis of any switch essential.

If you are navigating the fixed versus variable decision or simply want to know whether your home loan is still competitive, contact Evolve Lending & Finance for a review.