Relief in sight for homeowners as RBA poised for interest rate cut
According to a new Finder survey, 91 per cent of economists believe the RBA will cut the cash rate following its two-day meeting, which begins on Monday, with a 25 basis point cut bringing the cash rate down from 3.85 per cent to 3.60 per cent.
The cash rate was held firm last month, with RBA governor Michele Bullock explaining the decision was about 'timing rather than direction', and was waiting on more data to confirm the decreasing inflation.
At the end of July, the Australian Bureau of Statistics (ABS) published its quarterly inflation figures, which fell from 2.4 per cent to 2.1 per cent between March and June.
Trimmed inflation, also known as underlying inflation, also dropped from 2.9 per cent to 2.7 per cent.
Both headlining and underlying inflation rates are now within the RBA's 2-3 per cent target band, indicating inflation is low enough for the RBA to move forward.
Mortgage holders are likely to be the biggest winners if the official cash rate is reduced on Tuesday.
A homeowner with a $500,000 mortgage are set to save $2884 per year if the cash rate is passed on in full.
Fnder head of consumer research Garahm Cooke said the RBA's failure to cut rates lash month was a disappointment for mortgage holders.
'If the RBA doesn't cut next week, they are risking an all-out attack on their legitimacy in the eyes of many homeowners,' he said.
'Last month's decision to hold shocked the market, and we are now seeing a 90 per cent plus certainty of a cut. With inflation well within the target range, there is no reason to hold.
'Banks will be under intense scrutiny to pass on a cut in full,' he said.
Despite the overwhelming majority of economists predicting the fall in interest rates, University of Sydney's Stella Huangfu suggested the RBA should hold out for two reasons.
'First, June quarter trimmed mean annual CPI inflation is still 2.7 per cent, which is high within the 2–3 percentage target band and slightly above the RBA's forecast of 2.6 per cent,' she said.
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