RBA holds cash rate at September meeting

The official cash rate has been left at 3.60% by the Reserve Bank Board at its September monetary policy meeting which concluded this afternoon.

For Australians with a mortgage or money in savings, the decision means that their interest rates are likely to remain relatively stable until at least November, when the Board meets next.

Today's decision to hold rates had been widely anticipated by experts after the release of the August Consumer Price Index (CPI) last week which came in higher than many were expecting.

In its post-meeting statement, the Board made reference to this uptick, noting that inflation in the September quarter may be higher than initially anticipated.

"With signs that private demand is recovering, indications that inflation may be persistent in some areas and labour market conditions overall remaining stable, the Board decided that it was appropriate to maintain the cash rate at its current level at this meeting."

Is the cutting cycle nearing an end?

Looking ahead, the major question in the air is whether or not the central bank has any more cuts to make during this rate cycle.

Two in three experts and economists surveyed by comparison website Finder before today's meeting said that they were expecting one more cut from the RBA at its November meeting.

That sentiment is shared by major bank economists at ANZ, CommBank and Westpac. Interestingly, NAB recently changed its position and now expects the RBA to hold rates in November.

Belinda Allen, the head of Australian economics at CommBank, noted in a research update published last Friday that a November rate cut is by no means a sure-thing though.

"At this stage we do expect a 25bp rate cut in November but the outcome of the meeting is not a done deal.

"Instead, it will be highly dependent on the Q3 CPI outcome, with an acceleration in the trimmed mean CPI from 2.7% per year in annual terms making a rate cut a tough ask. The labour market data will also be important to watch."

Conveniently, that quarterly CPI update will be released by the Australian Bureau of Statistics on October 29, just days before the next RBA monetary policy meeting on November 3 and 4.

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