RBA leaves cash rate unchanged at 0.10% in June

author-avatar By on June 01, 2021
RBA leaves cash rate unchanged at 0.10% in June

Today the Reserve Bank left the cash rate unchanged at 0.10%, for the seventh consecutive month.

RBA Governor Dr Philip Lowe has maintained that the cash rate will not change until wage growth and inflation are both 'comfortably' above the 2-3% threshold, with unemployment also improving.

"For this to occur, the labour market will need to be tight enough to generate wages growth that is materially higher than it is currently. This is unlikely to be until 2024 at the earliest," he said.

However, New Zealand's Reserve Bank (RBNZ) has signalled that it could raise its cash rate as early as mid-2022, pending more positive economic data.

CEO of digital lending platform 'WLTH' Brodie Haupt predicted the RBA will maintain its 2024 guidance on lifting the cash rate.

"Even with strong growth in the property market over the last few months, the RBA looks set to hold rates for the foreseeable future," he said.

"The RBA has continuously said that they won't be increasing the cash rate until inflation is back within the target range and with no sign of this at the moment, I can't see the rates lifting earlier than expected."


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.


APAC economist for jobs search site Indeed, Callam Pickering, explained the RBA's thinking behind maintaining the cash rate at 0.10%.

“Right now, the Australian economy is a mile away from justifying tighter monetary policy. The RBA hasn’t hit their inflation target in five-years, we haven’t had wage growth of 3% or higher in eight-years and the unemployment rate hasn’t been below 4.5% since 2008," he said.

Mortgage Choice CEO Susan Mitchell said today's rate decision was "unsurprising".

“Pleasingly, data from the Australian Bureau of Statistics (ABS) revealed that the unemployment rate continues on its downward trend, however, we’re a long way off seeing a marked improvement to wages growth," she said.

"There are signs the nation's economic recovery is on track but the latest lockdown in Victoria is a reminder that monetary and fiscal support will be required for some time yet."


Photo by Tim Bish on Unsplash

Disclaimers

The entire market was not considered in selecting the above products. Rather, a cut-down portion of the market has been considered which includes retail products from at least the big four banks, the top 10 customer-owned institutions and Australia’s larger non-banks:

  • The big four banks are: ANZ, CBA, NAB and Westpac
  • The top 10 customer-owned Institutions are the ten largest mutual banks, credit unions and building societies in Australia, ranked by assets under management in November 2020. They are (in descending order): Great Southern Bank, Newcastle Permanent, Heritage Bank, Peoples’ Choice Credit Union, Teachers Mutual Bank, Greater Bank, IMB Bank, Beyond Bank, Bank Australia and P&N Bank.
  • The larger non-bank lenders are those who (in 2020) has more than $9 billion in Australian funded loans and advances. These groups are: Resimac, Pepper, Liberty and Firstmac.
  • If you click on a product link and you are referred to a Product or Service Provider’s web page, it is highly likely that a commercial relationship exists between that Product or Service Provider and Savings.com.au

Some providers' products may not be available in all states. To be considered, the product and rate must be clearly published on the product provider's web site.

In the interests of full disclosure, Savings.com.au, Performance Drive and Loans.com.au are part of the Firstmac Group. To read about how Savings.com.au manages potential conflicts of interest, along with how we get paid, please click through onto the web site links.

*Comparison rate is based on a loan of $150,000 over a term of 25 years. Please note the comparison rate only applies to the examples given. Different loan amounts and terms will result in different comparison rates. Costs such as redraw fees and costs savings, such as fee waivers, are not included in the comparison rate but may influence the cost of the loan.

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Harrison is Savings.com.au's Assistant Editor. Prior to joining Savings in January 2020, he worked for some of Australia's largest comparison sites and media organisations. With a keen interest in the economy, housing policy, and personal finance, Harrison is passionate about breaking down complex financial topics for the everyday consumer.

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