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Wall Street Journal
08-07-2025
- Business
- Wall Street Journal
Australia's Central Bank Surprises Markets by Keeping Rates Steady
SYDNEY–The Reserve Bank of Australia surprised financial markets Tuesday and left interest rates on hold, saying it could afford to take a little more time to assess the economic outlook. The official cash rate remained at 3.85%, despite financial markets pricing in a near-certain cut to 3.60%. The nine-member board voted six in favor the decision, with three against.
Yahoo
08-07-2025
- Business
- Yahoo
Australia's central bank keeps rates steady at 3.85%, stuns markets
By Stella Qiu and Wayne Cole SYDNEY (Reuters) - Australia's central bank on Tuesday left its cash rate steady at 3.85%, a shock for markets that had confidently wagered on a cut, saying the majority of the board wanted to wait for more information to confirm inflation was slowing. The Australian dollar jumped 0.8% to $0.6545, while three-year bond futures extended earlier losses and fell 13 ticks to 96.58. Wrapping up a two-day policy meeting, the Reserve Bank of Australia said it remained cautious about the inflation outlook, adding that six members had voted to hold rates steady while three voted against, a rare split decision for the board. Markets had been almost fully priced for an easing to 3.60% this week given core inflation had slowed to the mid-point of the RBA's 2% to 3% target range and consumer spending was proving weaker than expected. [AU/INT] "The Board judged that it could wait for a little more information to confirm that inflation remains on track to reach 2.5 per cent on a sustainable basis," the board said in a statement. "It noted that monetary policy is well placed to respond decisively to international developments if they were to have material implications for activity and inflation in Australia." On Monday, President Donald Trump ramped up his global trade war, telling trade partners like Japan and South Korea that higher U.S. tariffs would start on August 1, although there appeared to be opportunities for additional negotiations. The RBA cut interest rates in February and May, but the reductions did little to spur consumers into spending even as they lifted housing prices to record highs. The stubbornly frugal consumer is a reason that the economy barely grew in the first quarter and a slew of soft retail sales reports suggest households are saving rather than spending past tax cuts. A monthly inflation report had the closely-watched trimmed mean measure hitting 2.4% in May, a 3-1/2 year low and coming under the midpoint of the target band of 2-3%. That prompted many economists to bring forward their rate cut call to July from August. The labour market, however, remained resilient, which argues against the RBA rushing into stimulatory policy settings. The unemployment rate has been hovering at 4.1% for over a year now. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
ABC News
08-07-2025
- Business
- ABC News
Reserve Bank defies expectations of interest rate cut, keeping cash rate on hold at 3.85pc in July
The Reserve Bank has not delivered an interest rate cut in July as had been widely forecast, instead keeping the cash rate on hold at 3.85 per cent. The decision defied financial market expectations, which had priced in a 96 per cent chance of a 0.25 percentage point cut, and economist forecasts.
Yahoo
05-07-2025
- Business
- Yahoo
Major banks reveal interest rate cut predictions ahead of RBA meeting
The Big Four banks are unanimous that the Reserve Bank of Australia will be cutting interest rates next week. The Board will meet on Monday and Tuesday to discuss whether to hike, hold, or drop the cash rate from its current level of 3.85 per cent. Recent inflation, employment, and retail spending data have slowly led Commonwealth Bank (CBA), Westpac, and ANZ to join NAB in its July interest rate cut prediction. ANZ was the last of the Big Four to join the pack and said it was swayed by research showing that while retail spending was up, it's still a murky future. "The most recent reads on consumer confidence showing the prior uptrend remains stalled and ongoing uncertainty around US trade policy as we approach the expiry of the tariff pause, we now expect the RBA to cut the cash rate by 25 basis points at its July meeting," ANZ head of Australian economics Adam Boyton said. ANZ changes interest rate call as it jumps gun ahead of CBA, Westpac, ANZ Woolworths payment change hits dozens of supermarkets today Aussie earning $300,000 a year in job after completing three day course They all believe homeowners will be getting a 0.25 per cent cut on July 8. This would bring the cash rate down to 3.60 per cent. Despite getting similar cuts in February and May and inflation largely being brought under control, the Big Four believe the country isn't out of the woods just yet. CBA moved its prediction from August to July after consumer price index (CPI) data produced the best result since late 2021, with trimmed mean inflation falling from 2.8 per cent in April to 2.4 per cent in May."[The] monthly CPI print capped off a flow of data that should provide comfort to the RBA that a swifter return of the cash rate to neutral is both manageable and needed," Commonwealth Bank senior economist Belinda Allen said. 'The decision to cut the cash rate in July will still be a close one. We expect there to be a discussion of both leaving the cash rate on hold and cutting by 25 basis points.' Westpac followed that prediction a day later after the CPI data came in below its expectations, but insisted a July rate cut isn't the "shoo-in" that some expect. The bank's Belinda Ellis warned the quarterly inflation numbers could tell a different story when they're released later this month. 'In short, only because the RBA sees itself on a path of cutting rates soon will it decide to validate market pricing and get on with the next cut at its July meeting. But this is not the timing it previously thought it would be on," Ellis said. 'Given the lingering uncertainties and the RBA's concerns about a tight labour market, expect its post-meeting language to be non-committal, even a little grudging about the decision to cut.' This depends on who you ask and the answer could change in the coming weeks as more data comes in. Here's how many more cuts the Big Four are forecasting in 2025 and early 2026: CBA: Two more cuts to bring cash rate down to 3.35 per cent Westpac: Four more cuts to bring cash rate down to 2.85 per cent ANZ: Two more cuts to bring cash rate down to 3.35 per cent NAB: Three more cuts to bring cash rate down to 3.10 per cent Even though Commonwealth Bank believes there will be a cut next week, homeowners will also get another cut in August as well, it predicts. A poll of more than 14,000 Yahoo Finance readers found 67 per cent feel they would need at least four interest rate cuts to feel financially comfortable. According to Canstar, an owner-occupier with a $600,000 home loan debt today, and 25 years remaining on their loan, could see their monthly repayments drop by $90 with just one 0.25 percentage point RBA cut. That goes up to $150 per month if you have a $1 million loan. However, if you're on that $600,000 mortgage and there are four more interest rate cuts, you could be saving as much as $350 per month. Not only that, but you'd be able to borrow more if you wanted to crack the property market. Canstar found that a single person on the average wage was able to borrow $12,000 more after the recent May cut, while a couple could get an additional $23,000. If there are four more cuts, that single person could see their maximum borrowing capacity increase by almost $50,000 in the space of 12 months. 'When buyers see their maximum borrowing budgets rise at the same time, on the back of a policy change or a cash rate cut, the biggest winner in the equation is often the person selling the property," Canstar's director of data and insights, Sally Tindall, said. 'This cut will be a shot in the arm for the property market. However, if homeowners aren't equally encouraged to list their property for sale, then a surge in demand could see property prices rise even further."Error in retrieving data Sign in to access your portfolio Error in retrieving data
ABC News
19-05-2025
- Business
- ABC News
RBA live updates: Interest rate cut widely anticipated when Reserve Bank delivers decision this afternoon
The Reserve Bank will deliver its interest rates decision at 2:30pm AEST today, after a two-day meeting of its monetary policy board. Economist forecasts and financial markets are pointing to a 0.25 of a percentage point cut to the cash rate as a near certainty, in the wake of the Trump administration's tariffs and the resulting market fallout, while domestically, inflation has eased. Follow the live blog for full coverage and analysis of the rates decision, plus market reaction and the day's financial news, with insights from our specialist business reporters. Disclaimer: this blog is not intended as investment advice.
