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Inflation data points to another rate cut on the horizon, but we have heard this before… |
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The latest inflation figures have just been released, which present a strengthened case for another Cash Rate cut when the RBA meets in less than two weeks. Despite widespread expectations of a cut in July, the RBA surprised many by holding the Cash Rate at 3.85%. This was quite a shock to most in the industry, with the strong odds pointing to another 0.25 basis point reduction. RBA Governor Michele Bullock made it clear they were waiting on additional inflation data before making their next move—and now that data is in. This week’s CPI figures show underlying (trimmed mean) inflation has dropped to its lowest level since December 2021, with two consecutive quarters now sitting within the RBA’s 2–3% target band. Headline inflation came in at 2.7% for the year to June—slightly above the RBA’s May forecast of 2.6%, but still a solid result for wishful home loan borrowers. Inflation is broadly tracking in line with where the RBA expects, and markets are responding accordingly. Ahead of the data release, there was already a 95% chance priced in for a rate cut — confidence that’s likely to grow as we move into August. This is positive news for mortgage holders, especially with many households still looking to ease cost-of-living pressures. We could also see some lenders move early and reduce variable rates ahead of the RBA’s next decision. As the Cash Rate falls, it is important for our brokers to review your home loan. We are more than happy to take a look and make sure you’re still getting a fair deal. |
