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The RBA has called the official cash rate for June.
Following the June monetary policy meeting, the Reserve Bank of Australia (RBA) has decided to hold the cash rate at 4.35 per cent for the fourth consecutive month.
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In the Statement by the Reserve Bank Board following the decision, the RBA noted the economic outlook “remains uncertain and recent data have demonstrated that the process of returning inflation to target is unlikely to be smooth.”
“Inflation is easing but has been doing so more slowly than previously expected and it remains high. The board expects that it will be some time yet before inflation is sustainably in the target range. While recent data have been mixed, they have reinforced the need to remain vigilant to upside risks to inflation,” it said.
The RBA has reiterated that it will continue to rely on emerging data and the evolving assessment of risks.
“In doing so, it will continue to pay close attention to developments in the global economy, trends in domestic demand, and the outlook for inflation and the labour market,” it said.
While the RBA was expected to hold the cash rate this month, Finsure CEO Simon Bednar has warned that sticky inflation and the impact of government stimulus measures are likely to force the RBA’s hand towards another rate hike.
“We still have stubborn inflation to contend with, coupled with a strengthening job market and up-and-coming government stimulus including tax cuts,” Bednar said.
“For that reason, I think the RBA would be justified in lifting the cash rate, and then hold steady for the rest of the year.
“I think the one reality that will be sinking in for mortgage holders and for brokers is we will not see any reduction in rates during 2024, as we previously thought we would.”
Commenting on the decision, Mortgage Choice CEO Anthony Waldron said: “The Reserve Bank’s decision to keep the cash rate on hold at 4.35 per cent in June follows weak annual economic growth over the March quarter 2024, primarily caused by persistently high interest rates.
“While borrowers and hopeful buyers are eager to see rate cuts, the Reserve Bank governor has made it clear that tackling sticky inflation remains a priority.
“The June quarter Consumer Price Index will be key to informing the Reserve Bank’s future plans for the cash rate.”
Waldron emphasised the “critical” advice that mortgage brokers can give borrowers during this challenging economic environment.
“In a complex market, a broker’s expertise can help borrowers make confident decisions about their property plans,” Waldron said.
“As the end of the financial year approaches, borrowers planning for the year ahead should take a moment to ensure their home loan is still the best option for their current circumstances.”
Executive director at Connective, Mark Haron, stated this cash rate hold might “signal stronger economic resilience”; however, the “pressure and complexity of the borrowing landscape continues”.
“Mortgage stress is on the rise, and new borrowers face a challenging environment. Now more than ever, borrowers must prioritise informed decisions, and brokers have a vital role to play,” Haron said.
“Another month of interest rates on hold provides another window for brokers to engage with clients at scale with the right technology and automated processes. Keep communication channels clear and open to guide clients towards long-term financial goals.”
[RELATED: Cash rate hold expected, rate cuts pushed further out]
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