Reserve Bank predicted to slash interest rates on Tuesday amid cooling inflation
Benign quarterly inflation figures released by the Australian Bureau of Statistics in July should convince the board to cut the cash rate in a two-day meeting that started on Monday, AMP deputy chief economist Diana Mousina said.
Know the news with the 7NEWS app: Download today
In fact, a cut of 25 basis points to 3.6 per cent should have happened already, Mousina declared.
Mortgage holders will be hoping lightning doesn't strike twice after the central bank's board voted in a 6-3 decision to leave rates on hold in July, despite markets pricing in a near-certain chance of a cut.
The majority of economists also expect a cut this time around, including 31 out of 34 experts surveyed by comparison website Finder.
But with markets predicting another two cuts following this one, RBA governor Michele Bullock is likely to try to pare back expectations in her post-meeting communications after the meeting wraps up on Tuesday.
'We think that the RBA will still sound cautious on giving too much forward guidance and remain of the view that interest rates do not need to be aggressively cut for now, given their concern that upside inflation risks may occur again in Australia,' Mousina said.
Another potential concern for Bullock could be developments at the US central bank.
Mousina said we could be seeing the 'Trumpification' of the Federal Reserve after the US president 's appointment of ally Stephen Miran to replace departing governor Adriana Kugler.
Miran's appointment heralds a more dovish Fed board, which could mean lower US interest rates if Donald Trump gets his way.
'Stephen Miran's appointment to the Federal Reserve board will likely increase pressure for deeper rate cuts while broadening concerns around Fed independence,' JP Morgan chief economist Bruce Kasman said.
While the RBA has been more focused on domestic developments in recent months, the Fed's outsized influence on global borrowing costs can set the tone for international monetary policy.
When the Fed cuts, central banks around the world have tended to follow.
And a dovish turn could have consequences for the Australian dollar, investor expectations and the broader economy.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
ABC News
2 hours ago
- ABC News
Mortgage holders hopeful of RBA rate cut today
It's unlikely but not inconceivable that RBA governor Michele Bullock and the board will again opt to hold. ( AAP: Lukas Coch )
Courier-Mail
2 hours ago
- Courier-Mail
Short term rent hosts' shock plans
A shocking 88 per cent of Australian Airbnb hosts warn they won't offer their homes on the long-term rental market even if regulations are introduced or increased. This off a new survey that also found close to half threatened to leave properties empty rather than go to long-term rentals. A recent study by market research company YouGov has found even threats of night caps – which are proposed limits on the number of nights per year a host can lease out their property – have failed to move them. MORE: Named: Every bank that's slashed rates to under 5pc Shock as Aus big bank increases interest rates The survey which was commissioned by Airbnb revealed that two-thirds of the respondents believe their property couldn't transition from a short-term rental into a long-term rental. Respondents told the survey this was due to the properties being used as either a primary residence, secondary residence, holiday homes or believing overall it was unsuitable for long-term rental. APAC Manager at Hospitable Ethan Brown, who examined the impact of Victoria's 7.5pc short-stay accommodation levy introduced at the start of 2025, found some alarming results. 'There has been no improvement with rental vacancy rates as they remain at an extremely low 1.8pc and Melbourne's rent rose 2.8 pc in the last year,' he said in a statement. MORE: Aus landlord's epic council battle ends in demolition Explosive reform of negative gearing, capital gains perks 'There is also no evidence that this levy has seen short-term rentals shift to the long-term options and regional communities who rely on visitors now face higher costs without any benefit in return.' A University of Canberra research survey published in January 2025 found there were just under 134,000 properties listed as short-term rentals in Australia in 2023, which was a 22.8pc surge on the previous year. As of right now the figure is as high as 170,000 listed short-term rental properties, which is a further 26.7pc increase over the 2023 numbers. MORE: Cash-strap student turns $40k to 38 homes Govt pays $3.3m for unliveable derelict house The industry has argued that Airbnb hosts make up less than 2pc of the entire housing dwellings in the country, but critics say there are areas which are short-term rental heavy which increases pressure on rental prices. Queensland has become a magnet for short term rental hosts, given its minimal state-based regulations, better value property prices and higher investment returns. Popular holiday areas such as the Gold Coast, Sunshine Coast and Whitsundays have had major population increases which has translated into minimal vacancy and stronger rental prices. MORE REAL ESTATE NEWS
Perth Now
3 hours ago
- Perth Now
Bank revolt to grow as RBA cut looms
Cash-strapped Aussies are tipped to rush out and refinance their home loan, should the Reserve Bank of Australia cut interest rates again on Tuesday. Fresh data released by Mortgage Choice shows there was a 22 per cent spike in the number of Australians looking to refinance over the June quarter thanks to an interest rate cut in May. Mortgage Choice chief executive Anthony Waldron says the same could happen if the RBA reduces the official cash rate on Tuesday after its August meeting. 'The Reserve Bank is expected to deliver another cut to the cash rate at its August meeting, which should encourage more borrowers to see if they can access a better rate on their home loan,' he said. There was a 22 per cent spike in Aussies refinancing over the June quarter following the May rate cut. NewsWire / Emma Brasier Credit: News Corp Australia 'This aligns with findings from the survey data, which show that 72 per cent of homeowners review their home loan at least once a year, up from 59 per cent a year ago.' According to Mortgage Choice, 49 per cent of Aussies chose to refinance their mortgage to lower their interest rate, while 11 per cent wanted to consolidate debts and 10 per cent wanted to lock in a fixed rate or switch from fixed to variable (or vice versa). Separate data released by the Australian Bureau of Statistics shows over the first quarter, $60bn worth of home loans with an estimated 97,835 loans were refinanced with a new lender. That's a 3.1 per cent increase in both the value and number compared with the December quarter. The next quarter stats are due out on Wednesday. Should Aussies refinance Mortgage holders who can afford to keep up with their repayments could be thousands of dollars better off in the long-term. Research released by Canstar shows the average Australian borrower with $600,000 debt could save $272 a month on their repayments if there is a third interest rate cut. Australians could be out of debt three years earlier if they continue with higher repayments. NewsWire / Nicholas Eagar Credit: NewsWire But if that same owner kept the additional $272 a month on their mortgage, they could be out of debt three years and three months earlier. They would also pay $76,536 less in total interest over the life of their loan. Australians are being reminded of the benefits of paying more than needed on their monthly repayments ahead of Tuesday's highly predicted rate cut. At the time of writing, the money market had factored in a near 95 per cent chance of rate cut, when the central bank announces their cash rate decision at 2.30pm. Canstar data insights director Sally Tindall said while a predicted third interest rate cut 'will give real relief' to struggling households, those in a financial position could be significantly better off if they hold their payments. 'For those managing to hold their budgets together, consider keeping your repayments exactly the same,' Ms Tindall said. 'Every rate cut is another opportunity to invest back into your mortgage and potentially be debt-free months, if not years early.'
