Reserve Bank poised to reverse its rate ‘mistake'
Financial markets and economists are unanimous in expecting the bank to confirm the third cut in official interest rates this year following a two-day meeting that begins on Monday, delivering a $100 a month saving to Australians with a $600,000 mortgage.
Their belief has not been dampened despite the surprise of the Reserve's decision in July to keep rates steady after markets put the chance of a cut at 100 per cent. The hold decision was close run, board members supporting the move 6-3 in what was the first ever open split within the bank on rate settings.
Confirming the decision last month, bank governor Michele Bullock said while future interest rate cuts were likely, the issue was a matter of timing as she noted the importance of upcoming June quarter inflation figures.
They showed both headline and underlying inflation easing and within the RBA's 2-3 per cent target band. Headline inflation at 2.1 per cent fell to its lowest level since early 2021.
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The inflation numbers came after softer-than-expected jobs figures for June, the unemployment rate rising to a three-year high of 4.3 per cent. Job creation for the past three months has been effectively flat.
CBA senior economist Belinda Allen said a rate cut on Tuesday was a done deal.
She said the economic data – including the quarterly inflation report and last month's softer-than-expected jobs figures – since the Reserve's July decision all pointed to a loosening of monetary policy this week.
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