Experts back Melbourne Cup day for next RBA rate | Australian Markets

Mortgage holders will get additional rate reduction in 2025, with most specialists betting on a rate cut on Melbourne Cup day following quarterly inflation information.

The central bank is broadly tipped to cut rates of interest again this 12 months after the money rate dropped for the third time on Tuesday to three.60 per cent.

Tuesday’s curiosity rate determination by the Reserve Bak board was unanimous and in keeping with earlier feedback the place the central bank mentioned future rate cuts had been nearly timing.

The cut is the third within the cycle, after rate cuts in February and May, and follows the bank’s shock determination to keep the money rate on maintain in July.

Following the August rate cut, specialists rapidly forecast more curiosity rate reduction, though the market isn’t banking on back-to-back rate cuts.

Betashare chief economist David Bassanese mentioned more curiosity rate cuts had been approaching quarterly information, with inflation falling in direction of the midpoint of the two to three per cent goal.

“That said, barring a major growth scare, the RBA does not seem in any rush to cut interest rates,” Mr Bassanese mentioned.

“All up, my base case remains that a rate cut on Melbourne Cup day is an odds-on favourite – following release of the June quarter consumer price index report in late October.

“If the CPI report confirms annual underlying inflation has fallen to at least 2.6 per cent (the RBA’s current expectation) – as I expect – then I fully anticipate the RBA will cut rates to 3.35 per cent on Melbourne Cup Day, Tuesday November 4.”

AMP chief economist Shane Oliver mentioned the RBA would proceed to cut rates of interest on the back of dangers to greater unemployment and inflation subsiding.

“So, while low unemployment and poor productivity growth mean that the RBA will remain cautious and gradual in cutting rates, and they will assess the situation from meeting to meeting, we continue to see the RBA cutting rates again in November, February and May, taking the cash rate down to 2.85 per cent,” he mentioned.

In her press convention post asserting a rate cut in August, RBA governor Michele Bullock confirmed that additional curiosity rate cuts had been coming however mentioned the bank would stay information dependent.

“You’ll note that in the forecasts, we have inflation coming back down to target, and the unemployment rate remaining where it is with a couple more cash rate cuts in there – that’s the best sort of guess,” she mentioned.

“But things can change, and the board has to be taking things meeting by meeting and absorbing the data and thinking about what that might mean for whether or not we’re on track to achieve our goals.”