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Photo: Ché Lydia Xyang, CC BY-SA 3.0, via Wikimedia Commons
There would be no early Christmas gift for borrowers from the Reserve Bank of Australia (RBA) as its board has opted to keep the official cash rate steady at 4.35% during its final monetary policy meeting of 2024.
The decision, announced moments ago, aligns with market expectations and marks over a year since the RBA last adjusted rates. The central bank’s most recent rate hike occurred in November 2023, when it raised the cash rate by 25 basis points to its current level.
The hold comes as economic growth in Australia remains sluggish, with GDP expanding by just 0.8% in the year to September 2024 — one of the slowest paces in decades, excluding the pandemic period.
Economists from major banks had widely predicted the RBA would leave the rate unchanged. Commonwealth Bank anticipates the first rate cut in February 2025, while the other three major banks — ANZ, NAB, and Westpac — project a reduction in May 2025.
Although inflation is easing, the central bank remains cautious about acting prematurely. The latest monthly Consumer Price Index (CPI) indicator showed annual inflation at 2.1% for October 2024, its lowest level since July 2021 and within the RBA’s target range of 2% to 3%. However, the RBA believes the conditions are not yet ripe for loosening monetary policy.
The cash rate has been a key focus for borrowers, businesses, and mortgage brokers, as higher rates continue to weigh on household budgets and borrowing costs. With inflation showing signs of control but economic growth remaining weak, analysts expect the RBA to carefully navigate its policy decisions in 2025.
For now, borrowers will need to wait until the new year to see if conditions improve for a potential rate cut. The RBA’s next scheduled meeting will take place in February 2025.
What do you think of the RBA’s latest decision to keep the cash rate unchanged? Comment below.
