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It's a hold. No move on RBA cash rate.

The RBA has decided to keep the cash rate on hold for the fourth consecutive month, following today's meeting. With ongoing uncertainty around the economic outlook, the RBA has left rates unchanged giving it more time to monitor the impact of the rate rises to date, together with the evolving economic outlook.

In her speech following the meeting, new RBA governor Michele Bullock has said: 'The outlook for household consumption also remains uncertain, with many households experiencing a painful squeeze on their finances'. There is also 'uncertainties regarding the lags in the effect of monetary policy' and it's impact upon business decisions regarding wages, employment and pricing.

The RBA still wishes to see inflation come down further to a range closer to 2-3%, with further tightening of monetary policy in the future not being ruled out, However, Ms Bullock has reiterated that future cash rate decisions will depend upon the 'data and the evolving assessment of risks'. It is a watch and wait.

What this likely means for home loan customers is that they will be spared from a further increase in their variable interest rates (and therefore repayments) when banks likely follow suit.

What we will be looking for is whether the current hold will prompt any bank to reduce their current variable rates and if so, whether it is a short term win for customers or a sign that the tide is beginning to turn.

What is more clear however is that the significant increase in mortgage repayments, the impact on serviceability and how much people can borrow and the ongoing cost of living pressures has been felt by many home loan customers. It is a small win to know that for this month, however, the cash rate -and likely home loan rates - will remain on hold.

Let's watch and see what the banks do in response.


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