RBA UPDATE | Effective September 7, 2022

RBA UPDATE | Effective September 7, 2022

For the fifth consecutive month, the Reserve Bank of Australia (RBA) has made the decision to increase the nation’s official cash rate, which now sits at 2.35%. With the 50-basis-point (bp) increase, Australians are experiencing the highest cash rate since December 2014.

RBA Governor Philip Lowe explained that this is due to the high inflation rate, which is only “expected to increase further over the months ahead,” he said. Elaborating, Dr Lowe stated that while the board is committed to achieving a target inflation range of 2-3%, “the path to achieving this balance is a narrow one and clouded in uncertainty… [and] is not on a pre-set path. The size and timing of future interest rate increases will be guided by the incoming data and the Board’s assessment of the outlook for inflation and the labour market.”

Meanwhile, Head of Macroeconomic Forecasting at BIS Oxford Economics, Sean Langcake commented that, due to the mounting headwinds, “we expect the Bank will pause to assess the impact of higher rates sooner rather than later.”

Now, more than ever, it is important for Australians to leverage the expertise of mortgage brokers when looking to take out a loan or engage in a ‘home loan health check’. Mortgage and finance brokers are uniquely suited to assess each financial situation and help find the right solution to cater for borrower needs.

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