No Rate Cut: Reserve Bank Holds Steady
Update: 2025-12-07
Description
Mortgage holders may not receive an interest rate cut this year, as the Reserve Bank is expected to hold the official cash rate at 3.6%. This decision comes after three rate cuts in 2021, following a year that began with a rate cut. The recent uptick in inflation, now at 3.8%, has dampened hopes for another reduction. The Reserve Banks preferred measure of inflation, trimmed mean, stood at 3.3%. Rising house prices and the end of state rebates for power costs are contributing to this inflation spike. While no rate cut is expected, listeners should pay attention to the tone of the accompanying statement and press conference after Tuesdays meeting, as it may indicate a more hawkish tone and a cautious outlook. The bank is forecasting potential rate reductions in May and August of next year, but only if inflation begins to ease.
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