The Reserve Bank of Australia (RBA) reduced the official interest rate by 25 basis points to 4.10% following its latest monetary policy meeting.
The move was widely expected, as annual inflation dropped from 3.6% in the September 2024 quarter to 3.2% in December – bringing it closer to the RBA’s target range of 2-3%. The full statement from the RBA is available to read here.
Lenders generally take their cue from the RBA’s cash rate decisions and are likely to start announcing reductions to their variable-rate products over the next few days.
Looking ahead, it’s possible the RBA will further reduce the cash rate during 2025, but that depends on movements in inflation, unemployment and the wider economy.
With the market shifting, now is a good time to review your options as some lenders may provide more competitive rate adjustments than others.
Future Outlook: More Rate Cuts Ahead?
The RBA’s future monetary policy decisions will depend on key economic indicators, particularly inflation, employment levels, and consumer spending. If inflation continues to decline and economic growth remains sluggish, further rate cuts in 2025 could be on the horizon. However, should inflationary pressures resurface, the central bank may take a more cautious approach and maintain rates at current levels for an extended period.
What Should You Do Next?
With market conditions shifting, now is a great time for borrowers to review their financial options. Different lenders will react to the RBA’s decision at varying speeds, and some may offer more competitive rate reductions than others. Whether you’re a homeowner looking to refinance, a first-time buyer exploring mortgage options, or an investor assessing market trends, it’s crucial to stay informed and compare loan products to secure the best deal available.
If you’re unsure how this rate cut affects you, consider speaking with a mortgage broker or financial advisor to better understand your options in this changing economic environment.
If you are buying, re-financing or have any questions, contact Sal Cinque on the below information.
TAG Finance and Loans
Sal Cinque | CEO
03 9886 0800 | loans@tagfinancial.com.au
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