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RBA makes October 2023 cash rate call
After holding the cash rate at 4.1 per cent for three straight months, will the Reserve Bank increase the rate or continue to hold it? Find out in this special announcement, brought to you by Legal Home Loans.
Lawyers Weekly
After 12 rate rises in the last 14 months, the board of the Reserve Bank of Australia decided to hold the cash rate at 4.1 per cent, for the fourth straight month, in its October interest rate decision – the RBA’s ninth cash rate decision for 2023.
In a statement, newly appointed RBA governor Michele Bullock (pictured) said the decision was in light of “the uncertainty surrounding the economic outlook”.
“Inflation in Australia has passed its peak but is still too high and will remain so for some time yet. Timely indicators on inflation suggest that goods price inflation has eased further, but the prices of many services are continuing to rise briskly, and fuel prices have risen noticeably of late. Rent inflation also remains elevated. The central forecast is for CPI inflation to continue to decline and to be back within the 2–3 per cent target range in late 2025,” she said.
“Growth in the Australian economy was a little stronger than expected over the first half of the year. But the economy is still experiencing a period of below-trend growth, and this is expected to continue for a while. High inflation is weighing on people’s real incomes, and household consumption growth is weak, as is dwelling investment. Notwithstanding this, conditions in the labour market remain tight, although they have eased a little.
“Given that the economy and employment are forecast to grow below trend, the unemployment rate is expected to rise gradually to around 4½ per cent late next year. Wages growth has picked up over the past year but is still consistent with the inflation target, provided that productivity growth picks up. Returning inflation to target within a reasonable time frame remains the board’s priority. High inflation makes life difficult for everyone and damages the functioning of the economy.”
In conversation with Lawyers Weekly, Legal Home Loans founder and director Andrew Johnson said that another pause came as no surprise, as the “sharp hikes” as of late are currently “having the right impact so far on inflation”.
“Currently, the average interest rate range we are seeing for residential loans is approximately 5.8–6.85 per cent, depending on the product, lender and customer borrowing profile.
“Buyer confidence is notably coming back into the market as we get into spring buying season. Auction clearance rates in major cities such as Sydney, Brisbane, Melbourne and Adelaide are all higher compared to this time last year, and we are seeing more borrowers take the proactive step to obtain their pre-approval. If you are thinking of purchasing soon, we recommend organising your pre-approval now, as many lenders will have an option to lock in your interest rate for three months while you search,” he said.
“Lawyers should know that their advantaged position with lenders has not changed despite the rate rises. Exclusive benefits, such as waived lenders mortgage insurance when purchasing with a deposit less than 20 per cent, are still very much available.”
