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Interest Rates Recap May 2024

On the 7th of May 2024, the Reserve Bank of Australia (RBA) announced its latest decision that would affect interest rates across the country. And while the news was not unexpected, it left many Australians, particularly mortgage holders, disillusioned.  This is your interest rates recap for May 2024.

Key Points

Market Overview

The RBA released its much-anticipated statement on monetary policy  

The Reserve Bank’s statement noted the continued effects of high inflation. Although inflation is declining, it is doing so too slowly. The RBA stated that the path of bringing inflation within the target range was “unlikely to be smooth.”

Although their forecasts predict that inflation may yet return to this target range of 2–3 % in the second half of 2025, it could be higher in the near term. Thus, the Board decided to leave the cash rate unchanged at 4.35%. 

Analysts and economists were quick to share their opinions in the wake of this meeting. And all eyes are fixed on the RBA’s next meeting on the issue on June 17 and 18.

Relevant News

Of course, with the interest rate foremost in so many Australians’ minds right now, the news media covered the RBA’s decision from various angles. Meanwhile, experts weighed in on the RBA’s decision to maintain rates at a 12-year high

These included Paul Bloxham, chief economist at HSBC, one of Australia’s leading international banks. 

Mr. Bloxham noted that the RBA appeared to be more optimistic than before and that their “tighter financial conditions are expected to bring inflation down to target over the same timeframe”. He countered this by commenting that often “slower growth is needed to bring inflation down to target.”

Australian mortgage holders, desperate for a rate cut decision to ease their financial burdens, faced disappointment. However, real estate experts suggested that the RBA decision would give both property buyers and sellers more clarity.

Conclusion

The RBA’s decision to maintain the cash rate may be welcome news for some investors. 

Inflation-linked bonds and dividend-paying stocks typically thrive in times of high interest rates. More conservative investors, with fixed-income investments or significant sums in savings accounts, are also accustomed to enjoying higher returns. 

The latest interest rate decision is not good news for homeowners struggling to pay off their mortgages. But you can reduce mortgage stress with our free AI-powered mortgage diagnostic tool, which shows you how to pay off your mortgage, faster.

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