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Shh… we don’t want to jinx it do we?
Jinx what?
Well, the RBA might, just might be considering cutting their headline interest rate next week.
Oh!
Oh indeed.
Mark down next Tuesday Feb 18 in your diary, as that’s when the next scheduled RBA announcement is.
Are we going to finally see some relief?
The Big 4 banks certainly think so, with all 4 of them predicting an interest rate cut and a reduction in their fixed rate pricing.
It’s a sure sign that they feel confident of a rate drop.
Although there are still some market analysts who are calling for rates to remain on hold.
This is because despite a drop in underlying inflation from 3.5% to 3.2% in the December quarter, recent global economic uncertainties – such as the imposition of 25% tariffs on steel and aluminium by The Donald, have introduced new risks (Australia is one of the biggest exporters of steel… and aluminium).
The RBA may want to adopt a more cautious approach, and potentially delay any rate cuts until there is greater clarity on the macro environment.
But damnit if we don’t need rate cuts NOW.
A lot of people are hurting, and the increased cost of living and weaker household consumption has put a dampener on many household budgets.
According to Canstar, a 25 basis points drop would reduce the average $600,000 home loan repayment by almost $100 per month – that’s very welcome indeed.
So is the RBA odds on to cut?
Nothing is ever “guaranteed” when it comes to money and finance – and despite the big 4 banks all “saying” that the RBA will cut rates, my own personal opinion still remains the same.
That with strong job numbers (unemployment rate at 4%) and inflation numbers just above it’s target band (2-3%) – two of the RBA’s key drivers for monetary policy are still holding well.
This affords it some time to pause, reflect and potentially wait it out and see.
The Labor government probably wants it to cut (down to zero) given its an election year – but I like this lady (RBA governor Michele Bullock) and don’t think she will kowtow to politics.
So if I was a betting man, I’m going to stick my neck out and say rates will remain the same until later this year.
But who knows right?!
*Editor’s Note: even if rates are cut, don’t expect the crazy halcyon days of post COVID when we had 2% home loans – those days are looooong gone. No, rates are here to remain higher for longer :(
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Sponsor’s Note:
Speaking of fixed rates, here are some fixed rates that some of the lenders are offering, feel free to drop me an email or visit the company website for a review of your personal situation today!
* Please note these are fixed 2 years rates as of today and are indicative and subject to change.
** The monthly repayment figure is based on a loan of $600,000.
*** The rates are also for owner-occupiers paying principal and interest (investment rates and interest-only loans are slightly higher).
**** Only a guide! Don’t shoot the messenger please.
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P.S. Every post is the personal opinion of yours truly, please seek your own personal financial advice regarding your own personal circumstances.
