Yahoo Finance Another RBA interest rate hike ‘not off the cards’
Another rate hike would cost Aussies homeowners thousands.
Aussies are hoping the Reserve Bank (RBA) keeps interest rates on hold next week after the latest cost-of-living data showed inflation had eased to 5.6 per cent.
That was the smallest annual increase since April 2022 and well below market expectations of 6.1 per cent.
However, experts are warning another RBA hike isn’t off the cards, with the central bank desperate to bring inflation “back under control”.
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Why a cash rate hike is not off the cards
With inflation moving in the right direction, the RBA has a plausible reason to hit pause on the cash rate hikes next Tuesday. However, another hike next week is still a live option, according to RateCity.com.au.
The board’s concerns around “sticky inflation” in key sectors could be reason enough to press ahead with another hike.
If the RBA does increase the cash rate to 4.35 per cent, either on Tuesday or in coming months, it will take it to the highest level since November 2011.
What would another interest rate hike cost me?
RateCity analysis found another 0.25 per cent rise would mean the average borrower with a $500,000 loan at the start of the hikes could soon be paying a total of $1,211 more a month. That’s a 52 per cent increase.
Loan size | 0.25% increase to 4.35% | Total increase May 22-July 23 |
$500,000 | $77 | $1,211 |
$750,000 | $115 | $1,816 |
$1,000,000 | $153 | $2,422 |
RateCity research director Sally Tindall said, while inflation might be moving in the right direction, we were not out of the woods yet.
“The board is likely to have lingering concerns around underlying inflation and could very well press ahead with yet another cash rate hike on Tuesday,” Tindall said.
“Predicting the RBA’s moves has become increasingly difficult to do as we get closer to the cash-rate summit.
“While there’s no certainty what the RBA will decide, borrowers should plan for at least two more hikes. There’s no question we’re nearing the top of this perilously high mountain, but it’s unlikely we’re quite there just yet.”
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