Welcome to our live coverage of the Reserve Bank of Australia\u2019s (RBA) cash rate decision, which is expected at 2:30pm.<\/p>\n
We’ll bring you expert predictions and insights, coverage of the press conference immediately following the announcement, and of course the RBA’s decision on interest rates.<\/p>\n
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Mortgage stress has remained elevated despite RBA governor Michele Bullock announcing interest rate cuts in February, May and July. Picture: Christian Gilles<\/p>\n
Economist call: \u2018No cut today\u2019<\/p>\n
1:56pm<\/p>\n
The RBA will more than likely have their hands tied with today\u2019s decision, having underestimated the jump in inflation. Using the cash rate to help nudge inflation downwards is one of the bank\u2019s key fiscal objectives and one it\u2019s unlikely to compromise on despite the sluggish economy.<\/p>\n
\u201cFollowing last week\u2019s inflation overshoot, with trimmed mean inflation jumping 1% quarter-on-quarter and lifting annual core back to 3% at the top end of the RBA\u2019s 2-3% target band, the RBA are likely to hold the cash rate,\u201d said REA Group senior economist Eleanor Creagh.<\/p>\n
\u201cUnderlying inflation pressure has broadened once again and is sitting above the RBA\u2019s expectations. As a result, any further easing is unlikely until the core disinflation trend is re-established.\u201d<\/p>\n
Ms Creagh continued: \u201cWith inflation currently overshooting the RBA\u2019s track, it\u2019s possible we see less easing this cycle than markets had previously hoped, however, the bord will remain data dependent.\u201d<\/p>\n
What\u2019s the case for a rate cut?<\/p>\n
1:45pm<\/p>\n
While a hold decision is almost certainty locked in, several market outliers are still pressing forward with the case for a cut.<\/p>\n
Macquarie University professor of economics Jeffrey Sheen says the argument for a hold is not clear and forecasts a cut thanks to the positive 2.7% underlying inflation figure recorded in the second quarter. He says the recent uptick in inflation was expected due to the end of electricity rebates, noting trimmed mean inflation is still within target, if only just.<\/p>\n
Financial services firm Jarden is also expecting to see a cut from the bank today, with chief economist Micaela Fuchila stating inflation risks remain suitably contained.<\/p>\n
Could we be in for a cut after all? The majority of forecasts do not suggest so, but the bank has been known to catch the market off guard before, most recently in July when expectations for a cut were at 97% before the board confirmed a decision to hold.<\/p>\n
Home prices at record highs ahead of interest rates decision<\/p>\n
1:33pm<\/p>\n
National home prices rose 0.6% in October to a new record high \u2013 the 10th consecutive month of growth for the Aussie market. All capital cities except Hobart are now at record high value, while regional areas are still continuing to outstrip that growth.<\/p>\n
The country\u2019s most expensive city, Sydney, is now 42.2% pricier than it was in 2020. A typical home in the premier state will now set you back $1.22m, according to the latest PropTrack Home Price Index. It\u2019s followed by Brisbane, which has a median price of $976,000, and Perth, with a median price of $899,000.<\/p>\n
It comes after RBA governor Michele Bullock shared her views on the current state of the housing market in front of the Senate earlier this month, saying the country needed to \u201cget supply moving\u201d.<\/p>\n
\u201cMy policy that I have control over is the interest rate, but supply is the big thing here,\u201d she said. \u201cIt\u2019s been a structural issue for many years.\u201d<\/p>\n
Inflation may take a while to stabilise<\/p>\n
1:11pm<\/p>\n
The Reserve Bank was caught off guard by last week\u2019s high inflation figures and it may take far longer than expected to mitigate the effect.<\/p>\n
Westpac chief economist Luci Ellis this week as much as another full quarter could be needed to put the lid back on inflation, ruling out easing until well into next year. While she does not anticipate a rate cut until May, Ms Ellis said there was still a small chance for a surprise before then.<\/p>\n
\u201cThere is a pathway to a February rate cut, but only if the labour market deteriorates more than expected in the next couple of months and the emerging consumer recovery falters quickly,\u201d she said.<\/p>\n
\u201cAlthough we expect the December quarter inflation data to be a lot less scary than the September quarter, we think it will take more than one quarter of data to convince the RBA that the inflation trend is still consistent with target beyond the short term.\u201d<\/p>\n
Australia \u2018at risk of stagflation\u2019<\/p>\n
1:02pm<\/p>\n
Ahead of this afternoon\u2019s decision, the Australian Industry Group has warned the nation is at \u201celevated risk of stagflation\u201d. The term is used to describe an economic situation in which high inflation, slow economic growth and unemployment are all present at the same time.<\/p>\n
\u201cThe Consumer Price Index data is part of a dangerous cocktail,\u201d chief executive Innes Willox said.<\/p>\n
Mr Willox added the uptick of inflation is \u201centirely unsurprising\u201d, attributing the issue predominantly to poor productivity.<\/p>\n
It comes after the government was pushed to hold an Economic Reform Roundtable in September to address productivity concerns. Governor Bullock also attributed a strong part of the RBA\u2019s surprise decision to hold the cash rate in July to the same issue.<\/p>\n
\u201cMonetary policy is now increasingly torn between the imperatives of controlling prices and protecting employment,\u201d Mr Willox added. “The only route out of this bind is for Australia’s productivity to improve.\u201d<\/p>\n
Markets confident in an interest rate hold<\/p>\n
12:42pm<\/p>\n
Markets have priced in an almost definite likelihood of a rate hold this afternoon, with latest Australian Stock Exchange (ASX) figures forecasting just a 7% chance for a cut.<\/p>\n
The ASX\u2019s Rate Indication calculation had put the chances of the cut as high as 74% just two weeks ago \u2013 a figure which quickly plummeted following the release of September\u2019s unemployment figures. Chances were shot down even further last week when quarterly inflation data confirmed that headline inflation is outside of the RBA\u2019s 2-3% target range at 3.2%, while underlying inflation is also sitting at 3%.<\/p>\n
Market expectations of a cash rate hold today are now at a high of 93%, further cementing the consensus that Aussies won\u2019t see any relief from the bank today.<\/p>\n
While there is still one more chance for a rate cut this side of Christmas, expectations are dwindling as the spend-heavy Black Friday and Christmas periods approach.<\/p>\n
Inflation on the rise<\/p>\n
12:32pm<\/p>\n
The rise in both headline and underlying inflation in the September quarter is likely to have dashed any chances of a rate cut for today.<\/p>\n
Data published last week by the Australian Bureau of Statistics shows underlying inflation is dangerously close to heading back outside of the all-important 2-3% target range. Coming in at 3% for the September quarter, underlying inflation is now the highest it\u2019s been all year, meaning we could be back to where we started before this rate cutting cycle kicked off in February.<\/p>\n
While the bank was anticipating an uptick in headline inflation to coincide with the run-off of electricity rebates, the 3.2% is still a concerning number. Most crucially, both inflation numbers are higher than what the RBA had anticipated and forecasted for, meaning the door to more easing today is almost certainly bolted shut.<\/p>\n
The inflation figures come after an unwelcome uptick in unemployment, which\u00a0also caught the RBA off guard, increasing to\u00a04.5% in September.<\/p>\n
Cut, hold, cut, hold, cut, hold\u2026?<\/p>\n
12:14pm<\/p>\n
November marks nine months since the Reserve Bank began its highly anticipated cutting cycle following the economy\u2019s lengthy period of Covid 19-induced volatility.<\/p>\n
The bank has yo-yoed between cutting the cash rate and holding it steady thus far, delivering easing in February, May and August but keeping things level in April, July and September.<\/p>\n
The pattern is in line with governor Michele Bullock\u2019s assertions all year that the bank is aiming for a gradual return to stability. The board has been taking measured steps to ensure relief is both balanced with containing inflation and aligns to its mandate on employment levels.<\/p>\n
Borrowers have been able to capitalise significantly this year on the relief offered by lower rates, with three opportunities for most to lower monthly repayments. That said, many remain hungry for more opportunities to pocket some extra money as the nation claws back from the cost of living crisis.<\/p>\n
Welcome to our live coverage of the RBA’s cash rate decision<\/p>\n
12:01 pm<\/p>\n
Over the next few hours, we\u2019ll be bringing you all the latest updates, news and forecasts while we wait to hear whether the cash rate will remain at 3.60% or be lowered for a fourth time this year.<\/p>\n
If the bank does decide to make a cut, it will result in the lowest rate in more than 2.5 years. It will also mark the first time that the RBA has cut the rate four times in one year since 2012.<\/p>\n
This could be a milestone moment, as this last example came off the back of Australia\u2019s recovery from the Global Financial Crisis.<\/p>\n
Today\u2019s decision could go either way, with predictions of a cut having strengthened significantly in the last two weeks after initially looking very unlikely after the bank\u2019s last meeting in September.<\/p>\n