Cash Rate Decision November 2024: RBA Leaves Rate Unchanged At 4.35%

The Reserve Bank of Australia has opted to keep the cash rate target unchanged at 4.35% at its November 2024 meeting.

Why Did The RBA Hold The Cash Rate In November 2024?

The RBA has left the rate steady to continue monitoring economic conditions closely. While inflation has moderated, it remains above the target range. The headline inflation rate fell to 2.8% over the year to September, due primarily to temporary reductions in fuel and electricity costs. However, underlying inflation – which better reflects the ongoing inflation trend – stands at 3.5%, still above the RBA’s target midpoint of 2.5%.

Despite the reduction in headline inflation, the economy is experiencing weak output growth. Many households are feeling the pressure from declining disposable incomes and restrictive financial conditions. Although demand from temporary residents like students and tourists has helped boost spending, the overall outlook for growth remains uncertain.

The labour market remains strong but shows signs of easing. Employment grew steadily over the three months to September, averaging a 0.4% increase per month. The unemployment rate edged up to 4.1% in September, from a low of 3.5% in late 2022, but the participation rate is still at a record high. “Vacancies are still elevated and average hours worked have stabilised,” the RBA notes. Wage pressures have moderated, yet productivity still lags, remaining at 2016 levels.

The RBA highlighted that “the outlook remains highly uncertain”. The central projection anticipates growth in household consumption to pick up in the latter half of the year, as income growth accelerates. There’s also tentative evidence supporting an increase in spending during the September quarter. However, the RBA cautions that “there is a risk that any pick-up will be slower than expected, resulting in continued subdued output growth and a sharper deterioration in the labour market”.

Globally, economic uncertainty is still high globally as well. While most central banks have eased monetary policy, they remain vigilant about risks on both sides – be it weaker labour markets or stronger inflation. Geopolitical tensions further contribute to the uncertain global economic environment.

What Do Our Experts Say About The RBA’s Decision?

Alan Hemmings, CEO of Home Loan Experts, shared his perspective on the RBA’s decision:

“As expected, the Reserve Board has decided to hold the cash rate at its November meeting. There is still some uncertainty about when the first cut will happen, but realistically, it won’t be until 2025; there is not enough data for the RBA to make a move in December.”

So, what does it mean for you?

Hemmings emphasised the importance of current borrowers reviewing their rates:

“For existing customers, reviewing rates is important, as always. We are seeing lenders move on rates. That includes mostly fixed rates, but some are playing with variable rates as well.

How Does The Cash Rate Affect My Interest Rate?

Lenders add a margin to the official cash rate to determine the variable interest rate they offer to customers. So if you have a variable interest rate, it will almost certainly go up with a cash rate increase.

You can use our repayment calculator to find out what your repayments should look like whenever the cash rate changes.