‘Case not established': Shock blow as RBA keeps rates on hold in July meeting

News.com.au

11 hours ago

Australian households will have to wait a little longer for more mortgage relief, with slowing inflation and weak retail sales not enough to sway the central bank that the fight against cost of living is over.
A cautious RBA has held the official cash rate at 3.85 per cent following its July meeting, with the shock move defying expert commentators and the money markets predictions.
Prior to Tuesday's announcement, the money market had placed a 92 per cent chance on a rate cut off the back of weaker than expected economic data.
Mortgage holders will now have to wait until August at the earliest to get further interest rate relief.
Tuesday's annoucement follows a rate cut in May, with the central bank opting against back-to-back movements in the official cash rate.
Ahead of the announcement, Betashare chief economist David Bassanese said the 'case for a rate cut had not been established.'
'Although May trimmed mean annual inflation dropped to 2.4 per cent, this followed a solid 2.8 per cent gain in April - and there's every risk it could bounce back again in the more comprehensive and reliable June quarter CPI report later this month,' he said.
'Prudence suggests the RBA should and would await confirmation of lower inflation in the quarterly CPI report before cutting again in August - despite the market pricing a rate cut next week with near certainty.'
But he conceded last Wednesday's retail data gave the RBA a yellow light when it comes to making a rate call.
'Accordingly, although retail sales rose a weaker than expected 0.2 per cent in May, it does not necessarily give the green light to the RBA to cut interest rates next week,' he said.