Will the RBA change the cash rate in August?

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on August 04, 2020
Will the RBA change the cash rate in August?

Photo by Nathan Hurst on Unsplash

Australia's central bank meets again today to discuss the possibility of a change to the cash rate.

The Reserve Bank (RBA) has held the rate at a record low 0.25% for four consecutive months, after March saw two rate cuts as well as the implementation of a quantitative easing program

Any change to the cash rate for August looks extremely unlikely. 

Check out the decision here.

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

Lender
Advertised rate Comparison rate* Monthly repayment Rate TypeOffsetRedrawOngoing FeeUpfront FeesLVRLump Sum RepaymentAdditional RepaymentsPre-approval

VariableMore details
LIMITED TIME OFFER

Smart Booster Home Loan Discounted Variable - 2yr (LVR < 80%)

  • Fast turnaround times, can meet 30-day settlement
  • For purchase and refinance, min 20% deposit
  • No ongoing or monthly fees, add offset for 0.10%
LIMITED TIME OFFER

Smart Booster Home Loan Discounted Variable - 2yr (LVR < 80%)

  • Fast turnaround times, can meet 30-day settlement
  • For purchase and refinance, min 20% deposit
  • No ongoing or monthly fees, add offset for 0.10%
VariableMore details
ZERO APPLICATION FEESFEE FREE OFFSET

Owner Occupier Accelerates - Celebrate (LVR < 60%) (Principal and Interest)

  • We lower your rate based off how much you’ve paid down your loan
  • Automatic rate match
  • No upfront or ongoing fees
ZERO APPLICATION FEESFEE FREE OFFSET

Owner Occupier Accelerates - Celebrate (LVR < 60%) (Principal and Interest)

  • We lower your rate based off how much you’ve paid down your loan
  • Automatic rate match
  • No upfront or ongoing fees
FixedMore details
USE A MARKET LEADING APP TO HELP YOU PAY OFF YOUR LOAN SOONER

Fixed Home Loan 1 year (Principal and Interest) (LVR < 80%)

  • Make up to $20,000 additional repayments per fixed term
  • Redraw available – lets you access any extra loan repayments you’ve made
  • Choose to rate lock for 90 days (fee applies)
USE A MARKET LEADING APP TO HELP YOU PAY OFF YOUR LOAN SOONER

Fixed Home Loan 1 year (Principal and Interest) (LVR < 80%)

  • Make up to $20,000 additional repayments per fixed term
  • Redraw available – lets you access any extra loan repayments you’ve made
  • Choose to rate lock for 90 days (fee applies)
VariableMore details
REFINANCE IN MINUTES, NOT WEEKS

Variable Owner Occupied, Principal and Interest (Refinance Only)(LVR <75%)

  • No application or ongoing fees.
  • 100% free offset sub account.
  • Fast online application, approval in minutes not weeks.
  • Mobile app, Visa debit card, Apple and Google Pay
  • Refinance loans and variable rates only.
REFINANCE IN MINUTES, NOT WEEKS

Variable Owner Occupied, Principal and Interest (Refinance Only)(LVR <75%)

  • No application or ongoing fees.
  • 100% free offset sub account.
  • Fast online application, approval in minutes not weeks.
  • Mobile app, Visa debit card, Apple and Google Pay
  • Refinance loans and variable rates only.

Rates correct as of January 24, 2022. View disclaimer.

NAB economist Rodrigo Catril said the central bank was "almost certain" to keep monetary policy and its policy guidance unchanged moving forward.

The RBA's shadow board from the Australian National university meanwhile gave a marginal chance there could be a rate cut. 

"The Shadow Board attaches a 6% probability that a final rate cut, to the lower bound of 0% is appropriate," the Board said.

In a recent speech, RBA Governor Phillip Lowe said a rate cut was possible, but would require a reconfiguration to the current system, taking the rate to 0.10%. 

"Using international experience as a guide, it would have been possible to configure the existing elements of the RBA package differently," Dr Lowe said.

"For example, the various interest rates currently at 25 basis points could have been set lower, at say 10 basis points."

"The board has, however, not ruled out future changes to the configuration of this package if developments in Australia and overseas warrant doing so."

The RBA has repeatedly expressed it would not hike the rate until progress was made towards full employment and inflation sits between its desired band of 2-3%. 

Figures released last week showed Australia is experiencing deflation, with the consumer price index plunging 1.9% in the June quarter, the biggest drop seen since records began 72 years ago. 

The drop takes annual inflation to -0.3%, only the third time annual inflation has been negative in Australia's history.

Unemployment rose to 7.4% in June, up from 7.0% in May, as more people began to look for work and COVID-19 restrictions were eased. 

However, Dr Lowe said he expected unemployment to rise as the scars from the pandemic deepened. 

"As the labour market continues to improve, we expect many of these people will start looking for jobs, and thus be classified as rejoining the labour force," he said. 

"This will push up the measured unemployment rate at the same time that the share of the working-age population with a job is also rising."

Melbourne crisis warps economic outlook 

The RBA and economists have repeatedly said although the road to recovery was uncertain, it would only be achieved by flattening the curve, easing restrictions and returning the economy to normality. 

With Melbourne entering stage 4 restrictions this week and many locations in New South Wales and Queensland now advising the use of face masks, Australia has regressed in its battle against the virus. 

Weekly consumer confidence declined almost 2% last week, the fifth decline in a row and largest weekly decline in a month. 

ANZ Head of Australian Economics David Plank said sentiment had dropped almost 10% from its high at the end of May. 

"The rise in pandemic related deaths in Victoria and new case numbers rising in Sydney seem to be sapping confidence," Mr Plank said.

"The reductions in the Jobkeeper and Jobseeker payments from the end of September may have also weighed, with ‘current economic conditions’ falling sharply and the improvement in ‘current finances’ stalling at a low level."


Disclaimers

The entire market was not considered in selecting the above products. Rather, a cut-down portion of the market has been considered. 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. Savings.com.au, yourmortgage.com.au, yourinvestmentpropertymag.com.au, and Performance Drive are part of the Savings Media group. In the interests of full disclosure, the Savings Media Group are associated with the Firstmac Group. To read about how Savings Media Group manages potential conflicts of interest, along with how we get paid, please visit the web site links at the bottom of this page.

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Alex joined Savings.com.au as a finance journalist in 2019. He enjoys covering in-depth economical releases and breaking down how they might affect the everyday punter. He is passionate about providing Australians with the information and tools needed to make them financially stable for their futures.

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