In their first meeting of 2025, The Reserve Bank of Australia (RBA) announced a 25-basis point cut, bringing the cash rate back to 4.1 per cent from 4.35 per cent.
Simon Podger, our Director of Lending, gave his commentary:
“In good news for mortgage holders, the RBA has delivered their first rate cut in over four years.
Following 13 rate increases, the cash rate has been cut by 0.25% to 4.1%. Most economists were predicting such a move and the ASX rate tracker indicating markets backing a 90% chance of a cut.
RBA governor Michele Bullock highlighted that inflation has fallen considerably since the peak in 2022, with higher rates contributing considerably to reducing inflation. December quarter underlying inflation was 3.2% which the RBA believes shows inflation easing quicker than expected. Growth in private demand continues to be subdued and wage pressures continue to ease. This provided the RBA with enough confidence to cut rates today.
RESERVE BANK OF AUSTRALIA (RBA)
However, the RBA cautions that this trend may not continue. Patches of labour market data show stronger than expected results. No doubt, they will also look abroad to both Europe and the USA where central banks cut rates but inflation rose shortly after. Bullock also poured cold water on the idea that this implied that this was the start of a rate cutting cycle stating:
“Today’s decision does not imply that further rate cuts along the lines suggested by the market are coming”.
The next meeting will be held 31st March-1st April providing plenty of time for much needed data to see any initial effects and guide future moves.
Pleasingly, many lenders (including the big 4) have already announced passing on the cut in full and within a reasonable timeframe. This change in cash rate also has a positive impact to borrowing power with ranges of between $20-$45K from our initial investigations depending on client borrowing sizes.
While this sounds small it can be enough to allow a refinance or ability to purchase another investment property.”
For more information about how this affects you and your current or future situation, please get in touch.
Note: This post contains general commentary and advice and does not take into account your financial situation, objectives or needs. Before acting on this general advice you should consider if it is appropriate for you and your situation. We recommend that you obtain financial, taxation and legal advice before making any financial decision. Past performance is not a reliable indicator of future performance.
You should consider all factors and risks before making a decision. Please refer to our Financial Services Guide (FSG) for more information.
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In their first meeting of 2025, The Reserve Bank of Australia (RBA) announced a 25-basis point cut, bringing the cash rate back to 4.1 per cent from 4.35 per cent.
Simon Podger, our Director of Lending, gave his commentary:
“In good news for mortgage holders, the RBA has delivered their first rate cut in over four years.
Following 13 rate increases, the cash rate has been cut by 0.25% to 4.1%. Most economists were predicting such a move and the ASX rate tracker indicating markets backing a 90% chance of a cut.
RBA governor Michele Bullock highlighted that inflation has fallen considerably since the peak in 2022, with higher rates contributing considerably to reducing inflation. December quarter underlying inflation was 3.2% which the RBA believes shows inflation easing quicker than expected. Growth in private demand continues to be subdued and wage pressures continue to ease. This provided the RBA with enough confidence to cut rates today.
However, the RBA cautions that this trend may not continue. Patches of labour market data show stronger than expected results. No doubt, they will also look abroad to both Europe and the USA where central banks cut rates but inflation rose shortly after. Bullock also poured cold water on the idea that this implied that this was the start of a rate cutting cycle stating:
The next meeting will be held 31st March-1st April providing plenty of time for much needed data to see any initial effects and guide future moves.
Pleasingly, many lenders (including the big 4) have already announced passing on the cut in full and within a reasonable timeframe. This change in cash rate also has a positive impact to borrowing power with ranges of between $20-$45K from our initial investigations depending on client borrowing sizes.
While this sounds small it can be enough to allow a refinance or ability to purchase another investment property.”
For more information about how this affects you and your current or future situation, please get in touch.
Note: This post contains general commentary and advice and does not take into account your financial situation, objectives or needs. Before acting on this general advice you should consider if it is appropriate for you and your situation. We recommend that you obtain financial, taxation and legal advice before making any financial decision. Past performance is not a reliable indicator of future performance.
You should consider all factors and risks before making a decision. Please refer to our Financial Services Guide (FSG) for more information.