Good news for home loan borrowers
For the second consecutive month, the Reserve Bank of Australia (RBA) has left the cash rate at 4.10%.
That begs the question – have interest rates peaked or will the RBA board make further rate rises in the coming months?
The answer depends on inflation.
The reason the RBA board has been raising interest rates has been to cool the economy, and thereby reduce inflation (currently 6%) to its target range (2-3%). Inflation has been trending down since December 2022 and is forecast to fall to the target range by the end of 2025. But the board may feel more rate hikes are needed to make sure of the job or accelerate the process.
“Returning inflation to target within a reasonable timeframe remains the board’s priority,” the RBA said in a statement announcing the cash rate decision.
“Some further tightening of monetary policy [i.e. rate rises] may be required to ensure that inflation returns to target in a reasonable timeframe, but that will depend upon the data and the evolving assessment of risks.”
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