The first Tuesday in November, Melbourne Cup Day, is shaping up as the most likely date for a much-anticipated cut in official interest rates by the Reserve Bank (RBA), according to Bell Partners Finance.
Bell Partners Finance managing director Mark Stevenson (pictured above) noted that the RBA has a history of making cash rate decisions on this iconic race day, making it the best bet for a rate reduction.
“The RBA has been under pressure to reduce rates after its last rate movement was a 25 basis points increase on Melbourne Cup Day last November, which lifted the official rate to its current level of 4.35%,” Stevenson said.
RBA’s recent history with Cup Day has seen rate adjustments on the big day for three consecutive years.
In 2021 and 2022, the RBA raised the cash rate by 25 basis points on Cup Day, but in 2020, during the height of the COVID-19 pandemic, it cut rates to a historic low of 0.1%.
“Although the central bank did discuss a rate hike at its August meeting, it’s more likely to cut if it does decide to take action with inflationary pressures easing,” Stevenson said.
The annual monthly CPI was at 3.5% in July, moving closer to the RBA’s target band of 2-3%.
Stevenson pointed out that the next key inflation data, due out on Oct. 30, just a wek before Cup Day, will play a crucial role in RBA’s decision-making process.
“The next major inflation data for the September quarter will be released on October 30, a week before Melbourne Cup Day,” he said.
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