Will the RBA cut interest rates again in November?

The RBA’s next meeting is only a few short weeks away, but recent comments by RBA Governor, Philip Lowe have sharply downgraded the chances of a November cut.

Addressing the International Monetary Fund in Washington earlier this month, the usually measured Lowe seemed more optimistic than ever, telling those in attendance that the year’s three rate cuts were finally producing results.

"The economy has been through a very soft patch over the past year but it is actually gradually improving — the lower interest rates are working," he said.

Related: What is the cash rate and how does it affect you?

"I don't think it's the right assumption to make that we're going to have a lot more work to do to get inflation back to target and growth back to trend.”

When pressed by the audience on the question of negative interest rates, Dr Lowe stated it’s “extraordinarily unlikely” that interest rates in Australia would dip below the zero mark during his tenure.

Are Aussies buying it?

Unemployment rates feature quite prominently in the RBA’s deliberations, and a big reason why Lowe is currently singing a positive tune is those figures dropped from 5.3% to 5.2% in September.

It’s a positive development, sure. But it is just a single data point, and the overall picture isn’t so rosy. 

Wage growth remains sluggish, inflation consistently falls below target, and despite Lowe’s chipper remarks, there’s a growing belief that rate cuts have had an unnerving effect on consumers, leading to a collective tightening of belts.

Taken together with the IMF’s latest World Economic Outlook report - which downgraded an initial forecast of 2% growth in Australia this year to 1.7% - it’s possible we haven’t yet weathered the worst of the current slump.

When will the RBA next cut rates?

So if the RBA won’t be reducing interest rates next month, when can we expect it to make a move? While Lowe seems content to admire his handiwork at the moment, he has alluded to at least one more cut down the track. Right now, many are predicting February will be the month.

“A February cut gives time for things to settle down, for people to relax and spend a bit of money at Christmas,” said Mozo’s banking expert, Peter Marshall.

“When the RBA cut rates twice back in June and July, it really had a big impact on consumer confidence. I don’t think they want to repeat that experiment.”

But how much do mortgage holders stand to benefit come February? After three rate cuts this year, banks and lenders are starting to look pretty fatigued. When the RBA does make a move, it’s unlikely we’ll see many pass on more than a portion of the cut to their variable home loan customers.

“They may cut 0.15% again but my money would be on 0.10% or 0.12%. We’re getting to the bottom, and the next cut is where we’ll see the banks reasserting their need to maintain margins,” said Marshall.

The good news is that depositors probably won’t feel the full force of the next cut. Savings accounts haven’t fared too well in the past few months, and banks will have to start holding firm with their rates if they want to continue to attract customers.

So if you’re wondering how your current savings rate stacks up compared to what else is on the market right now, check out some of the options below, or visit our savings account comparison page for a more in-depth look.