What’s Happening With Interest Rates? – May Rate Report
The Reserve Bank of Australia (RBA) Board made their third cash rate decision of the year on Tuesday May 7, 2024.
What does ‘cash rate’ mean?
The cash rate is the interest rate that banks pay to borrow funds from other banks in the money market overnight. Technically speaking, it is the interest rate on unsecured overnight loans between banks (loans banks use to manage their liquidity). It is the RBA’s operational target for the implementation of monetary policy.1
The cash rate impacts all other interest rates, including mortgage and deposit rates. That’s why the media, the finance industry and Australian homeowners (and hopeful homebuyers) pay close attention to each cash rate decision. Learn more about the cash rate here.
What’s the May verdict?
On May 7, 2024, the RBA Board decided to keep the cash rate on hold at 4.35%, and it may stay put for the foreseeable future. The minutes from the March Monetary Policy Meeting suggest that the key macro metrics that influence CPI are conflicting. Housing supply and labour productivity are low, yet population growth, the employment rate and house prices are high.
These competing forces and the uncertainty that comes with them may cause the RBA to assume a ‘wait and see’ position. In other words, the Board may refrain from making bold rate moves – up or down – any time soon, and instead just wait for the dust to settle.
What does this hold decision mean for me?
If you were relying on an interest rate cut being handed down this month, and you’re really feeling the pinch, now is the time to contact to our team.
We may be able to help bring your monthly repayments down through repricing or refinancing your home loan, and provide some much-needed relief. Reach out to our team today for an obligation-free chat!
If you’re new here and not sure how to get in touch, simply call 1300 886 100, or visit moneyquest.com.au and fill out the enquiry form.
1Reserve Bank of Australia Cash Rate Target Overview
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