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United States RBA interest rates: Live updates as board looks set to hold fire but warn mortgage relief still months away
If you’ve landed here hoping to read news of imminent interest rate relief, apologies, we have none to give.
But take comfort, dear reader, it’s unlikely to get any worse*, at least not in the near term (*not a guarantee, so you can all stopping googling ‘lawyers near me’).
As inflation started to retreat from all-time highs in December 2022 — and fall to just outside the RBA target range of between 2 and 3 per cent at the end of 2023 — our brightest economic boffins turned to the tea leaves and tarot cards to pinpoint exactly when the central bank board would start loosen the screws. Anywhere from June to September seemed to be the consensus.
That would have coincided nicely with the Federal Government’s stage three tax cuts to take effect on July 1 and marked a “hallelujah” moment for beaten-down homeowners who have had to bare the brunt of a credit squeeze that took the official cash rate from a record low 0.1 per cent in May 2022 to a 12-year high of 4.35 per cent in November last year.
But with inflation still stickier than a spoonful of Grandma’s porridge flicked against the kitchen wall, most of those boffins have given the leaves a second stir and pushed out their best-case rate cut forecasts to much later in the year, or even early 2025 — some have even tipped the possibility, albeit a small one, of a 10 basis-point hike around August. Gulp.
Either way, we can all start getting used to hearing the phrase “higher-for-longer”.
That’s nice to hear if you’ve been sharpening up your javelin skills, enjoy those little blue pills or like flying a kite — not so much if you’re only just scrapping together repayments that have risen by $1210 a month for those with an average $500,000 mortgage.
In fairness, RBA governor Michele Bullock did start softening up the ground for an extend run of the status quo when she told us after the last board meeting in March that nothing was being “ruled in or ruled out”.
On one hand retail spending continues to decline and most companies are reporting that shoppers are becoming far more value-conscious. On the other, new car sales have never been higher, the housing market is going through the proverbial roof and the jobs market remains resilient.
Clearly, the effects of the cash crimp aren’t been felt evenly. What’s new, you ask? Well, quite.
So, what to do? As always, the RBA will say the truth is in the data and we’ll just have to wait for a sign.
With another five board meetings to come in 2024 after today, settle in for a long cycle of rinse and repeat.
Key Events
Like a broken record, there’s no clear steer on rate cuts
Homeowners searching for clarity on when they can loosen the purse strings will be disappoited by today’s statement from the RBA.
Like a broken record, the RBA has published the same line it did at the last meeting ... and the one before that ...
Returning inflation to target within a reasonable timeframe remains the Board’s highest priority.
“he board said expects that “it will be some time yet” before inflation is sustainably back within its 2 to 3 per cent target and it “will remain vigilant to upside risks”.
“The path of interest rates that will best ensure that inflation returns to target in a reasonable timeframe remains uncertain and the board is not ruling anything in or out,” it noted, also repeating the line from governor Michele Bullock in March.
“The board will rely upon the data and the evolving assessment of risks.
“In doing so, it will continue to pay close attention to developments in the global economy, trends in domestic demand, and the outlook for inflation and the labour market.
“The board remains resolute in its determination to return inflation to target.”
Inflation fight a slow process, RBA concedes
The RBA says inflation remains high and it is falling more gradually tahn it expected.
“Higher interest rates have been working to bring aggregate demand and supply somewhat closer towards balance,” it said in its statement released minutes ago.
“But the data indicate continuing excess demand in the economy, coupled with strong domestic cost pressures, both for labour and non-labour inputs.
“Conditions in the labour market have eased over the past year, but remain tighter than is consistent with sustained full employment and inflation at target.
“Wages growth appears to have peaked but is still above the level that can be sustained given trend productivity growth.
“Meanwhile, inflation is still weighing on people’s real incomes and output growth has been subdued, reflecting weak household consumption growth.”
BREAKING: And (as expected) it’s a hold!
The Reserve Bank’s board remains cautious on lifting or cutting the official cash rate setting and has decided to keep it on hold.
At 4.35 per cent, it hasn’t changed since November.
New regime brings problems for some
The RBA this year started a new regime that shifted away from monthly meetings in favour of two-day get-togethers eight times a year.
Some suggest that’s not frequent enough for people to understand the RBA’s thinking, with some suggesting it creates an information vacuum.
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Start the countdown ...
We’re 30 minutes away from the RBA board’s decision after two days of deliberations.
The general consensus among economic and market punters is that the board will err on the side of caution, worried one more rise will be too much for most households to bear.
But we can’t discount the agrument that it might just be what’s needed to put the final nail in the coffin of stubborn and sticky inflation.
We’ll find out either way at 12.30pm.
Coles and Woolies to face the music
We know the cost-of-living crisis continue to be felt in every household across the country whenever we take a close look at the weekly grocery receipt.
There are multiple inquiries looking at the role our supermarket giants aplaying in persistently high prices for food and claims of price gouging.
A report from one of those, initiated in Federal Parliament by the Greens, is due to be released today.
The inquiry has been examining allegations of price inflation by major supermarkets while suppliers and producers were being undercut.
Producers told the inquiry of many in the industry being fearful of speaking out against the practices of the supermarket chains for fear of losing contracts.
A review of the food and grocery code of conduct, which governs the relationship between suppliers and supermarkets, recommended fines of $10 million for companies that don’t comply.
The review, led by former Labor minister Craig Emerson, also called for the current voluntary provisions to be made mandatory.
While there have been calls for divestiture laws to break up the supermarket duopoly, the review dismissed the idea.
A review of the food and grocery code of conduct, which governs the relationship between suppliers and supermarkets, recommended fines of $10 million for companies that don’t comply.
The review, led by former Labor minister Craig Emerson, also called for the current voluntary provisions to be made mandatory.
While there have been calls for divestiture laws to break up the supermarket duopoly, the review dismissed the idea.
Want a great deposit rate for your savings?
If you’re lucky enough to not have to worry about a mortgage and you have some cash to stick away for a rainy day, half your luck (umm ... and can we borrow a little please?).
As the home loan market remains highly competitive, banks are keeping a watching brief on rates that will lure depositors happy to tuck away their money.
But the deals vary, and as Your Money’s finance guru Nick Bruining explained in Monday’s edition of The West Australian, you’re unlikely to find the best deal at one of the Big Four.
Worrying housing signs as run of high rates cripples budgets
Almost a quarter of homeowners are worried they’ll have to sell, or have already sold, due to the rising cost of living, according to a recent Compare the Market survey.
The research also showed 39 per cent of renters fear their landlord will have no other choice but to sell up and potentially leave them homeless.
SQM research recent revealed the number of residential properties sold under distressed conditions in Australia had risen to 5252 - an increase of 2.4 per cent.
The comparison site’s economic director David Koch said it reflected the domino effect following the fixed rate mortgage cliff.
“Many people’s savings buffers have been depleted, and now they’re struggling to meet repayments,” Mr Koch said.
“But a forced sale is really the last resort – most homeowners will fight tooth and nail to hold onto their properties.
“We know tax cuts are coming in July, which should provide some relief. A predicted cash rate cut is hopefully under way in the second half of this year too.
“When interest rates fall, property prices are tipped to increase – so that’s something homeowners should be aware of as well. But borrowers need to be proactive and make sure they’re on a low rate now.”
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