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***NEWSFLASH*** RBA keeps cash rate ON HOLD

To the relief of many home loan customers, the RBA has announced this afternoon that it will keep the cash rate on hold for a second consecutive month.

The RBA cited the fact that inflation has somewhat eased and, together with the uncertainty surrounding the economic outlook, it decided to hold interest rates steady this month.

At 6% inflation is still deemed to high but it is forecast to continue to decline over the next 12 - 18 months. It will continue to monitor inflation together with labour market conditions, unemployment and household consumption to determine future cash rate decisions. The RBE has not ruled out further tightening of monetary policy in the future to 'ensure that inflation returns to target in a reasonable timeframe'.

After 13 rate rises in just over 12 months, with the RBA holding the cash rate for the second consecutive month, it therefore is very unlikely that we will see any movement in interest rates by the banks. This will be welcome news for those who had been fearing yet another interest rate rise (and therefore increase in repayments) on their home loans.

While the consensus is that we may not start to see banks start to compete on interest rate again and even start to reduce home loan rates until sometime next year, it gives those home loan customers who were starting to feel the pinch with their repayments, more certainty as to what to expect for the next month with regards to repayments.

And some semblance of certainty is what many home loan customers will take in what have been such uncertain times.

As the dust settles after today's RBA meeting, it is important for home loan customers who are due to exit their fixed rates in the next few months and even those on variable rates, to reach out to their brokers to ascertain whether the rate their loan will fall under, is still the best that they can do right now.


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