Reserve Bank keeps interest rates steady at 4.10%
Australians with a mortgage have likely been spared further increases to their home loan rates for another month following the Reserve Bank Board's decision to keep the official cash rate on hold at 4.10% this afternoon.
There may have been a change at the helm as new governor Michele Bullock took charge of her first monetary policy meeting following the departure of former governor Philip Lowe, but it was steady as she goes on the cash rate front.
A slight uptick in the Consumer Price Index (CPI) to 5.2% for the 12 months to August - driven in part by surging fuel prices - is likely to have given the board something to mull over.
But as Bullock noted in her post-meeting statement, the board appears satisfied with the impact previous rate hikes are continuing to have on tempering inflation.
"Interest rates have been increased by four percentage points since May last year. The higher interest rates are working to establish a more sustainable balance between supply and demand in the economy and will continue to do so.
"In light of this and the uncertainty surrounding the economic outlook, the Board again decided to hold interest rates steady this month. This will provide further time to assess the impact of the increase in interest rates to date and the economic outlook."
How high will interest rates go?
Despite a fourth consecutive pause, the RBA might not be finished with its cash rate increases just yet, with Bullock noting that further tightening may be necessary to bring inflation back within the central bank's target range of 2-3%.
It's certainly a possibility being entertained by some, including 42% of the economists and experts recently polled by Finder who believe that the cash rate will peak at either 4.35% or 4.60%.
A higher proportion (48%) of experts polled indicated that their belief is that interest rates have already hit their highest point at 4.10% though.
One of Finder's survey respondents, Peter Boehm of Pathfinder Consulting, said before today's rate decision that the Reserve Bank would be keeping a close eye on whether the August CPI increase was a one off or a sign of stickier inflation.
"I believe the new Reserve Bank Governor, despite underlying inflation ticking up, will want time to assess whether this new uptick reflects a new trajectory, or is a blip.
"If underlying inflation holds at this level for another month, the chances of a rate increase in November are almost certain."
The inflation picture will be clearer at the end of this month when the Australian Bureau of Statistics releases its inflation data for the September quarter - two weeks before the Reserve Bank's next monetary policy meeting on November 7.
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