RBA announces interest rate decision at June meeting

There’s no mortgage relief on the horizon and now borrowers have been hit with an even worse doomsday prediction.

The Reserve Bank of Australia (RBA) has kept interest rates on hold at its June meeting on Tuesday afternoon.

It’s not quite cause for celebration among homeowners, though, as struggling borrowers now face having to hold on for months longer before the rates are slashed to a more manageable level.

The RBA has paused interest rates all year at 4.35 per cent amid signs of inflation slowing down as the economy weakens.

Not since November last year has the cash rate changed.

Several experts had predicted that the cash rate might begin to get cut as early as this month at the June decision.

But in the past few months, many have revised down their estimates, pushing back the expected date of mortgage relief.

As recently as April, financial markets were betting on the RBA cutting the cash rate at the June meeting by 20 basis points, to sit at 4.15 per cent.

However, ahead of today’s announcement all were expecting rates to remain unchanged.

Australia’s big four banks have been forecasting that the rates will begin to be cut from November this year.

But last week, ahead of this Tuesday’s meeting, ANZ changed its tune.

Homeowners have been caught in the tightest ever interest rate cycle for the last 20 years. Picture: NCA NewsWire/ Gaye Gerard

In her statement to the Australian public explaining her reasoning for the Tuesday afternoon decision, RBA Governor Michele Bullock refused to give any ground or hint at what will come next.

“Inflation has fallen substantially since its peak in 2022, as higher interest rates have been working to bring aggregate demand and supply closer towards balance. But the pace of decline has slowed in the most recent data,” she wrote.

“The economic outlook remains uncertain and recent data have demonstrated that the process of returning inflation to target is unlikely to be smooth.”

She added later on in her written address: “There have been indications that momentum in economic activity is weak, including slow growth in GDP, a rise in the unemployment rate and slower-than-expected wages growth.

“At the same time, the revisions to consumption and the saving rate and the persistence of inflation suggest that risks to the upside remain.”

Reserve Bank Governor Michele Bullock appears at the Senate, Economics Legislation Committee Estimates at Parliament House in Canberra. Picture: NewsWire/Martin Ollman

ANZ revised its economic outlook to the rates cut happening from February next year – a long way away for borrowers on the brink.

“The stronger than expected Q1 CPI also makes it hard to see the RBA being sufficiently confident that inflation will return to and stay in the band by the time the November meeting comes around,” ANZ head of Australian economics Adam Boyton wrote in a research note.

“It’s not that monetary policy isn’t working. It is,” he said.

“The economy has clearly slowed, particularly across private final demand. It’s for this reason that we think a rate hike remains unlikely.

“However, getting an appropriate balance between the level of demand and supply is likely to take a little longer than expected.”

ANZ broke rank with the other banks and has pushed back its predictions for a rate cut. Picture: Lisa Maree Williams/Getty Images

It comes as two leading economists have poured water on the hopes of cash-strapped homeowners around the country.

They warned that Australians will be hit by two more rate rises before the end of the year.

Former Commonwealth Treasury principal adviser Warren Hogan believes borrowers will be lumped with two more rate rises in the next six months.

The first will hit in August, and then again in November, at 25 basis points each.

“The evidence building since they (the RBA board) last met is getting worse for that view,” Mr Hogan told The Daily Telegraph.

Another economist shared his view, with University of NSW economist Richard Holden telling the publication that the next meeting after today will likely move the cash rate up.

Originally published as RBA announces interest rate decision at June meeting