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RBA reveals first cash rate call for 2025
Has the time finally arrived for the Reserve Bank to cut the cash rate? In this special announcement, brought to you by Legal Home Loans, we reveal whether the RBA has opted to provide much-needed economic relief to home owners and mortgage holders, including lawyers, nationwide.
Jerome Doraisamy
After holding the cash rate in its December 2024 meeting, the board of the Reserve Bank of Australia has decided to cut the cash rate by 25 basis points, from 4.35 per cent to 4.1 per cent.
In a statement, the board said: “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. In the December quarter, underlying inflation was 3.2 per cent, which suggests inflationary pressures are easing a little more quickly than expected. There has also been continued subdued growth in private demand, and wage pressures have eased. These factors give the board more confidence that inflation is moving sustainably towards the midpoint of the 2–3 per cent target range.
“However, upside risks remain. Some recent labour market data have been unexpectedly strong, suggesting that the labour market may be somewhat tighter than previously thought. The central forecast for underlying inflation, which is based on the cash rate path implied by financial markets, has been revised up a little over 2026. So, while today’s policy decision recognises the welcome progress on inflation, the board remains cautious on prospects for further policy easing.”
However, the board continued, uncertainty about the outlook abroad also remains significant.
“Geopolitical and policy uncertainties are pronounced and may themselves bear down on activity in many countries if households and firms delay expenditures pending greater clarity on the outlook. Most central banks have been easing monetary policy as they become more confident that inflation is moving sustainably back towards their respective targets. But market expectations for further easing have moderated somewhat in recent months, particularly in the United States,” it said.
Speaking to Lawyers Weekly about the board’s decision, Legal Home Loans (LHL) general manager Aylin Unsal said: “We are very happy to see today’s announcement.
“The RBA’s decision to cut the cash rate today is welcome news for mortgage borrowers and prospective buyers. A long-awaited move that will finally bring some relief.
“Assuming the banks will pass on the rate cut, those on a variable home loan set-up will save a bit of cash on their monthly interest repayments.”
With the cash rate now moving in a downward direction, Unsal continued, LHL expects that demand for purchases is likely to rise.
“If you’ve been thinking of purchasing, we highly recommend getting your pre-approval organised now,” she said.
“Lower interest rates make buying more attractive by increasing affordability and borrowing power. This historically results in more buyers in the market, intensifying competition and potentially driving prices higher.”
Unsal added: “Don’t forget, legal professionals can access certain market advantages, such as home loans with just a 10 per cent deposit and waived lender’s mortgage insurance.
“These benefits can make entering the property market more attainable and realistic for the cohort. It’s best to speak to a specialist broker for lawyers to gauge what’s best for you.”
Jerome Doraisamy
Jerome Doraisamy is the editor of Lawyers Weekly and HR Leader. He has worked at Momentum Media as a journalist on Lawyers Weekly since February 2018, and has served as editor since March 2022. In June 2024, he also assumed the editorship of HR Leader. Jerome is also the author of The Wellness Doctrines book series, an admitted solicitor in NSW, and a board director of the Minds Count Foundation.
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