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RBA reveals September 2024 cash rate call
Last week, the US Federal Reserve cut interest rates by half a percentage point – the first cut for Americans since the early days of the COVID-19 pandemic. Has the Reserve Bank of Australia opted to follow suit in this week’s two-day board meeting? Find out in this special announcement, brought to you by Legal Home Loans.
Jerome Doraisamy
After holding the cash rate at 4.35 per cent for the entirety of 2024 thus far, including at its August board meeting, the Reserve Bank of Australia has decided to stay the course and hold the cash rate at 4.35 per cent.
In a statement, the RBA board said that the outlook remains uncertain.
“Inflation has fallen substantially since the peak in 2022, as higher interest rates have been working to bring aggregate demand and supply closer towards balance. But inflation is still some way above the midpoint of the 2–3 per cent target range,” it said.
“The central forecasts published in August were for underlying inflation to return to the target range of 2–3 per cent late in 2025 and approach the midpoint in 2026. This reflected a judgement that the economy’s capacity to meet demand was somewhat weaker than previously thought, evidenced by the persistence of inflation and ongoing strength in the labour market.”
Returning inflation to target, the RBA board continued, “is the priority”.
“Sustainably returning inflation to target within a reasonable time frame remains the board’s highest priority. This is consistent with the RBA’s mandate for price stability and full employment. To date, longer-term inflation expectations have been consistent with the inflation target, and it is important that this remain the case,” it said.
“While headline inflation will decline for a time, underlying inflation is more indicative of inflation momentum, and it remains too high.”
In conversation with Lawyers Weekly about the decision, Legal Home Loans director Andrew Johnson said that the RBA’s decision to hold the cash rate today is “positive news, providing stability” for borrowers and aspiring home owners.
“Currently, the average interest rate for residential loans ranges from 6.0 per cent to 6.9 per cent, depending on the product, lender, and customer profile. Some banks have already reduced their fixed and variable mortgage rates,” he said.
“This is likely a forward-looking move, driven by expectations that interest rates may come down in 2025.
“If you’ve been considering purchasing property, now could be an ideal time to get your pre-approval organised.
“As interest rates eventually drop, demand is expected to rise, making it a more competitive market. By acting now, you could stay ahead of potential price increases and take advantage of any future rate reductions.”
Legal professionals can get ahead of the competition, he went on, by leveraging exclusive benefits, such as home loans with just a 10 per cent deposit and waive lender’s mortgage insurance.
“These advantages make entering the property market more attainable and realistic for the cohort,” he said.
“It’s best to speak to a specialist broker for lawyers to gauge what’s available for you.”
Jerome Doraisamy
Jerome Doraisamy is the editor of Lawyers Weekly. A former lawyer, he has worked at Momentum Media as a journalist on Lawyers Weekly since February 2018, and has served as editor since March 2022. He is also the host of all five shows under The Lawyers Weekly Podcast Network, and has overseen the brand's audio medium growth from 4,000 downloads per month to over 60,000 downloads per month, making The Lawyers Weekly Show the most popular industry-specific podcast in Australia. Jerome is also the author of The Wellness Doctrines book series, an admitted solicitor in NSW, and a board director of Minds Count.
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