The Reserve Bank of Australia’s (RBA) Monetary Policy Board is meeting next week to make a decision on the cash rate.<\/p>\n
Many people paying off mortgages were hoping the board would vote for a cut, but recent inflation data means that is highly unlikely.<\/p>\n
Here is what you need to know about the October meeting.<\/p>\n
When does the RBA meet next?<\/p>\n
This coming Monday and Tuesday.<\/p>\n
The RBA’s Monetary Policy Board meets over two days before announcing its decision.<\/p>\n
When is the next interest rate decision?<\/p>\n
The Reserve Bank board always puts out a statement announcing the decision at 2:30pm AEDT on Tuesday.<\/p>\n
After that, we will hear from Reserve Bank governor Michele Bullock at a 3:30pm AEDT press conference to explain the reasoning behind the decision.<\/p>\n
We always live blog the RBA rate decisions, so be sure to head to the ABC news website<\/a> for live updates and commentary from the ABC’s business reporting team<\/a>.<\/p>\n What is the cash rate target?<\/p>\n The cash rate target is 3.6 per cent.<\/p>\n That is after the board decided to hold the rate target at the September meeting<\/a>.<\/p>\n This figure is often referred to as “the interest rate” in conversation, but it is not the rate people with mortgages pay.<\/p>\n “The cash rate is the interest rate that banks pay to borrow funds from other banks in the money market overnight,” the RBA’s website says<\/a>.<\/p>\n “It influences all other interest rates, including mortgage and deposit rates.”<\/p>\n Loading…<\/p>\n That is why, if you are paying interest on a loan, your interest rate is probably higher than 3.6 per cent.<\/p>\n At the moment, the average variable mortgage rate tends to be roughly 2 percentage points above the cash rate, with some loans a bit below that and others a bit higher.<\/p>\n When the RBA changes the cash rate target, interest rates for mortgages do not automatically change \u2014 the individual banks decide that.<\/p>\n Will there be a rate cut?<\/p>\n We can never say for sure, but the overwhelming sentiment from experts is that the RBA will not cut rates at this meeting.<\/p>\n That is mainly to do with the quarterly inflation figures going back up.<\/p>\n Inflation kills rate cut hopes<\/a><\/p>\n It now looks far from certain that interest rates will fall again at all.<\/p>\n New figures published this week<\/a> put the annual inflation rate \u2014 called the Consumer Price Index (CPI) \u2014 at 3.2 per cent.<\/p>\n Prior to this, it was 2.1 per cent.<\/p>\n It does not sound like much of an increase, but it is pretty significant because it means the inflation rate is higher than the RBA’s target range.<\/p>\n The RBA wants inflation to be somewhere between 2 and 3 per cent and had been saying it would not be cutting the cash rate until inflation went down.<\/p>\n The underlying inflation rate \u2014 which is also called the trimmed mean and is the RBA’s preferred measure of inflation \u2014 went up from 2.7 per cent to 3 per cent.<\/p>\n You can see how both measures have been tracking on this graph:<\/p>\n These figures effectively quashed all hopes of a rate cut, finance reporter Alicia Barry<\/a> told ABC News 24.<\/p>\n “It essentially means we’re on hold,” Barry said.<\/p>\n “It’s very unlikely, according to economists and the markets, that we will see a rate cut in 2025.<\/p>\n “The caveat, of course, is if we see a rapid slowing in the economy, or the unemployment rate jumps further.”<\/p>\n When will the RBA cut rates?<\/p>\n That is another one we cannot say for sure, but we can look at what economists are predicting to give us a good idea.<\/p>\n ABC business editor Michael Janda<\/a> says the market is betting the next cut will not come until May<\/a>, which is six months away.<\/p>\n “There’s a real risk that cut won’t eventuate if inflation doesn’t suddenly reverse,” Janda says.<\/p>\n “In fact, there’s a growing risk the next move could be up, albeit probably not for quite some time if that were to happen.”<\/p>\n Here is when the Big Four banks reckon the RBA will cut the cash rate:<\/p>\n ANZ: The bank says a February cut is “plausible” but suggests a cut may not come until later than thatCommonwealth Bank: The bank’s latest update does not give a prediction for the next cut; it just says the rate will be unchanged for “a prolonged period”NAB: Not until the June quarterWestpac: February \u2014 but the bank says this is “far from certain” and is reassessing its cash rate outlook<\/p>\n This is a stark difference from what the banks had forecast last month<\/a>.<\/p>\n Back then, ANZ, Commonwealth and Westpac were betting on a rate cut at the November meeting \u2014 only NAB was expecting the next cut to come in 2026.<\/p>\n