Photo by Harry Cunningham on Unsplash
Australia's central bank meets on Tuesday to discuss the possibility of a change to the cash rate.
The Reserve Bank of Australia (RBA) has held the cash rate at 0.25% for three consecutive months before today, after cutting the rate twice in March and implementing a quantitative easing (QE) program.
Any change to the cash rate for July is looking incredibly 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
Product Features
- Discount variable for 1 year <=80% LVR
- No ongoing fees
- Unlimited redraw facility
Monthly repayments: $1,476
Advertised
Rate (p.a.)
1.99%
Comparison
Rate (p.a.)
2.47%
Product Features
- Discount variable for 1 year
- No ongoing fees
- Unlimited redraw facility
Base criteria of: a $400,000 loan amount, variable, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. If products listed have an LVR <80%, they will be clearly identified in the product name along with the specific LVR. The product and rate must be clearly published on the Product Provider’s web site. Monthly repayments were calculated based on the selected products’ advertised rates, applied to a $400,000 loan with a 30-year loan term.
NAB economist Ray Attrill said recent remarks from the RBA and current economic and health conditions meant a cash rate hold was all but confirmed.
"The RBA this afternoon can confidently (be) expected to be on hold as it continues to assess the outlook, where even in its best-case upside scenario, full economic recovery will take years," Mr Attrill said.
"Further, Governor Lowe has emphasised that the economic recovery depends on health outcomes and how quickly confidence is restored, where the recent COVID-19 outbreaks in Victoria have presented an additional downside risk."
The RBA has been defiant that the cash rate is at its effective floor and repeatedly stated it does not have the appetite for negative interest rates in Australia.
Instead, as a result of the central bank's QE measures, the cash rate has been pushed lower and has hovered around the 13-14 basis point mark.
At an address to The Economic Society Australia last week, RBA Deputy Governor Guy Debelle said it was unlikely the cash rate would be increased before the end of 2021.
"The market expectation is that the cash rate will remain around its current level of 13–14 basis points for at least the next year," Mr Debelle said.
"This is consistent with the Board's guidance that the cash rate target will not be raised until progress is being made towards full employment and it is confident that inflation will be sustainably within the 2–3% target band.
"Given the outlook for inflation and the labour market, this is likely to be some years away."
July 23 looms large
Although no surprises are expected from the RBA today, their announcement may provide valuable insight into the fiscal cliff Australia is facing at the end of September.
Treasurer Josh Frydenberg will hand down a mini-budget on July 23, outlining the fate of the boosted JobSeeker payments and the JobKeeper scheme.
RBA Governor Phillip Lowe has emphasised his concern that economic recovery will be stymied if the support measures are withdrawn too early.
"I think it's very important that we don't withdraw the fiscal stimulus too early," Dr Lowe said at the end of May.
"Ending the fiscal support could be damaging, but if the economy bounces back then tailoring the fiscal support might be the right thing to do."
Around 3.3 million workers are currently supported by JobKeeper's $1,500 a fortnight payment, and a hard end to the scheme could see a huge spike in unemployment.
The unemployment rate currently sits at 7.1%, with more than 800,000 people losing their jobs since the start of COVID-19.
Unwilling to consider negative interest rates, the RBA is essentially all out of tools to manipulate monetary policy, and is now looking to the Government to provide support to the economy through fiscal measures.
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): 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.
*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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