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The Reserve Bank has kept the official cash rate on hold at 4.35% for the third month in a row, which was widely anticipated by the market.

The Board came to the decision after signs the economy is slowing. The unemployment rate came in above the much-anticipated threshold of 4% for the first time in two years, at 4.1% in January, seasonally adjusted.

At the same time, wages growth (led by public sector salaries) has climbed higher. 

In a sign the central bank is done with rate hikes, the decision statement has taken a clear shift in tone.

"The path of interest rates that will best ensure that inflation returns to target in a reasonable timeframe remains uncertain and the Board is not ruling anything in or out... The Board remains resolute in its determination to return inflation to target." 

Notably, the rest of that sentence 'and will do what is necessary to achieve that outcome' does not appear in the statement.

PropTrack senior economist Eleanor Creagh said it's likely the cash rate has peaked in the current tightening cycle.

“This sustained pause reflects the continued easing of inflation pressures while the economy, businesses, and consumers are adjusting to the full impact of significant interest rate tightening delivered since May 2022," Ms Creagh said.

Ms Creagh said it's likely the central bank will begin to cut rates in the second half of the year.

“Looking ahead, the next move for interest rates is likely to be down. Despite a weaker outlook for the economy, the positive tailwinds for housing demand and a slowdown in the completion of new homes are likely to offset the impact of reduced affordability and a slowing economy.

"As a result, prices are expected to lift further in the months ahead, particularly while the expectation remains that interest rates will move lower in late 2024.”

Economists at Westpac and Commonwealth Bank are in agreement the next rate cut will be in September, while those at NAB and ANZ believe it will be November.

However, more hawkish market watchers are now suggesting there will be no cut to the cash rate until 2025. 

Buying a home or looking to refinance? The table below features home loans with some of the lowest interest rates on the market for owner occupiers.

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LenderHome LoanInterest Rate Comparison Rate* Monthly Repayment Repayment type Rate Type Offset Redraw Ongoing Fees Upfront Fees LVR Lump Sum Repayment Additional Repayments Split Loan Option TagsFeaturesLinkCompare
6.04% p.a.
6.06% p.a.
$2,408
Principal & Interest
Variable
$0
$530
70%
 Featured Online ExclusiveUp to $4k cashback
  • Immediate cashback upon settlement
  • $2000 for loans up to $700,000
  • $4000 for loans over $700,000
5.99% p.a.
5.90% p.a.
$2,396
Principal & Interest
Variable
$0
$0
80%
  • A low-rate variable home loan from a 100% online lender. Backed by the Commonwealth Bank.
6.14% p.a.
6.16% p.a.
$2,434
Principal & Interest
Variable
$0
$250
60%
  • Find out your loan eligibility in 2 minutes or less
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  • Low fees and fast approval times
5.95% p.a.
5.95% p.a.
$2,385
Principal & Interest
Variable
$0
$0
90%
5.94% p.a.
5.95% p.a.
$2,383
Principal & Interest
Variable
$0
$0
90%
Important Information and Comparison Rate Warning

Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. However, the ‘Compare Home Loans’ table allows for calculations to be made on variables as selected and input by the user. Some products will be marked as promoted, featured or sponsored and may appear prominently in the tables regardless of their attributes. All products will list the LVR with the product and rate which are clearly published on the product provider’s website. Monthly repayments, once the base criteria are altered by the user, will be based on the selected products’ advertised rates and determined by the loan amount, repayment type, loan term and LVR as input by the user/you. *The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. Rates correct as of .

Photo by Neil Thomas on Unsplash

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