Australia's central bank meets again today to discuss the possibility of a change to the cash rate.
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.
Smart Booster Home Loan
- Discount variable for 1 year <=80% LVR
- No ongoing fees
- Unlimited redraw facility
Monthly repayments: $1,476
- Discount variable for 1 year
- No ongoing fees
- Unlimited redraw facility
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."
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 2019. They are (in descending order): Credit Union Australia, 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.
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.
*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.
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