When Aussies will see ‘high likelihood’ of next rate cut

Borrowers wanting a third rate cut in 2025 are going to have to wait a little while longer, writes John Rolfe.

Borrowers wanting a third rate cut in 2025 are going to have to wait until August 12, when the next Reserve Bank board meeting concludes.

Six nervous nellies on the nine-member RBA board still don’t believe there’s enough evidence that inflation is licked.

Governor Michele Bullock repeatedly declined to say if she was one of those six, but she vigorously defended the decision to hold.

Money markets reckoned a reduction this week was a sure thing.

And most economists were of a similar view after May’s monthly inflation report came in with a headline of 2.1 per cent and 2.4 per cent after big rises and falls were stripped out.

Reserve Bank Governor Michele Bullock. Picture: Christian Gilles / NewsWire

That so-called “trimmed mean” measure has been in the RBA’s target band of two to three per cent for six months now.

But the RBA was less focused on monthly data than traders and economists were, Ms Bullock explained.

The central bank preferred more in-depth quarterly numbers.

She noted that to date, there has only one quarterly trimmed mean reading in the target band.

And that was a result of 2.9 per cent for the three months to the end of March.

At the end of July the next quarterly CPI result will be released, providing extra information about whether inflation is contained.

By holding off until the next meeting, the RBA will also get more opportunity to assess what Donald Trump does on tariffs.

There’s a very high likelihood that the RBA will cut in August.

That would take the cash rate to 3.6 per cent.

Borrowers wanting a third rate cut in 2025 are going to have to wait until August 12, when the next Reserve Bank board meeting concludes.

Financial markets predict the cash rate will be at 3.1 per cent or lower by early next year.

But let’s not forget that the markets were also certain there would be cut this week.

Most people with a variable rate home loan are desperate for relief.

For now, the only way to get that will be to do it yourself.

Even if your interest rate is competitive, you may be able to push your lender for something better.

Knocking just 0.1 per cent extra off an $700,000 loan saves more than $500 a year.

If your rate is not competitive, then find a better deal. I just did and saved thousands.

Originally published as When Aussies will see ‘high likelihood’ of next rate cut