RBA keeps rates on hold for November as experts predict when a cut could come

Mortgage holders have been given no pre-Christmas relief, with the Reserve Bank of Australia keeping the cash rate on hold at its November meeting.

The RBA kept the cash rate at 4.35 per cent, as widely anticipated.

Rates have been on hold for one year now, with the last rise coming in November 2023.

RBA Governor Michele Bollock said that "inflation has fallen substantially since the peak in 2022, as higher interest rates have been working to bring aggregate demand and supply closer towards balance."

However it was also noted that "While headline inflation has declined substantially and will remain lower for a time, underlying inflation is more indicative of inflation momentum, and it remains too high."

Leading economists had overwhelmingly predicted that rates would be kept on hold this month.

And they have weighed in on when the next rate cut could come.

What next

"It was only a few months ago when some forecasters were still expecting a November cut, but the data simply hasn't been compelling enough to bring rates down just yet," said CoreLogic Executive Research Director, Tim Lawless.

He pointed to the fact that inflation is reducing but still too high for a cut.

"The RBA's preferred measure of core inflation, the trimmed mean, has trended lower since a peak of 6.8 per cent in the final quarter of 2022.

"But at 3.5 per cent, it's safe to say underlying inflation is on the right path but hasn't quite reached its destination yet."

He said the decision to hold rates this month, could point to a drop in rates next.

"At the very least, the decision to hold interest rates at 4.35 per cent should provide a further boost to household confidence, along with clear signs that inflation is moving in the right direction and the next move is likely to be down, albeit with some uncertainty around the timing of cuts," Mr Lawless said.

LJ Hooker Group's Head of Research, Mathew Tiller predicts there will no rate relief in December either, the last time that the RBA will meet this year.

"Government energy rebates and lower fuel prices are temporarily masking core inflation, making a rate cut now unlikely until 2025," Mr Tiller said.

"While this isn't good news for those struggling with home loan repayments, there is a lack of urgency for the RBA to take action as employment remains positive and people are still spending even with the strain on household budgets."

Ray White Group Chief Economist, Nerida Conisbee, also pointed to a strong economy influencing the rate decision today.

"We are getting close but unfortunately November was not the month for a rate cut," Ms Conisbee said.

"Although inflation is now within the target range, hitting 2.8 per cent last week, the RBA decided to keep rates on hold."

She said the RBA's hesitation to move rates comes as unemployment remains low and spending continues in some key areas such as travel.

"The economy appears to be doing ok, even with higher rates," she said.

"Importantly, there is significant job growth - if people want a job, they are still able to find one."

Change ahead

She said however that latest job numbers also pointed to higher participation.

"We continue to see the participation rate increasing and this is at least partly driven by rising household stress," Ms Conisbee said.

She also pointed to the fact that "while the economy is growing, the rate of growth is lacklustre".

"The annual increase in June was just one per cent, the slowest growth rate since the early 1990s recession, excluding the COVID-19 pandemic period.

"While it was a hold this month, the RBA should look to cut in December. Interest rate cuts take time to have an impact on the economy."