May RBA Decision: Cash rate unchanged
- Official Cash rate remains at 4.75%
- Uncertainty abroad and Japan disaster cited
- Recent CPI spike to settle within target
The Reserve Bank of Australia announced today that it will be keeping the cash rate steady at 4.75% despite rising inflation.
The RBAâ€™s decision is aligned with the ongoing strategy of strengthening the Aussie economy on the back of the recent local and regional natural disasters. Uncertainty in the EU as well as a levelling-out of employment growth were quoted by RBA Governor, Glenn Stevens as being “accommodative” to today’s decision.
But despite the interest rate freeze, many economists expect the cash rate increase in the near future.
According to Paul Bloxham, a former Reserve Bank economist, last weekâ€™s CPI numbers were â€œthe beginning of the upward swing of inflationâ€, and we should expect the cash rate to increase around the start of the third quarter.
“We expect that the next rate rise will be in July or August and that we’ll get another 50 basis points this year, by the end of this year,” he said.
Make a preemptive strike against the coming rate rise
With many economists expecting imminent increases in the cash rate, some of you are probably suffering from mortgage stress. If so, then now might be a great time to compare home loans, and perhaps make a switch.
Switching from the Big Four Banks could save you as much as a full 1 percentage of interest. For the average $285,000 loan (based on ABS data) over 25 years, thatâ€™s $184 per month, or $55,226 over the life of the loan (compared to the loans.com.au dream home loan).
See for yourself how much you can save using Mozoâ€™s home loan repayments calculator.
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