We weren't sure it would happen, but today Phillip Lowe delivered!

He channelled some serious Kenergy and decided to keep the cash rate steady at 4.10% AGAIN. 

The cash rate has been kept at 4.10% for the last not one…but two RBA meetings.

This is HUGE. Because the RBA hasn’t kept the cash rate steady for this long since early 2022.

And it’s the first indication that the economy might finally be slowing down enough for the RBA to put its feet up for a hot min.

This news is a huge sigh of relief for a lot of mortgage holders, who are really feeling the pinch of the cash rate rises.

In fact, almost 29% of mortgage holders are at risk of mortgage stress, and this is the highest the number has been since the GFC!

Luckily the RBA’s decision was in line with what a lot of experts were expecting.

And that’s because, just like The Lumineers, inflation has been slowing it down.

For the 12 months to June inflation dropped to 6%, down from the peak of 7.8% late last year. 

In fact, the drop of inflation to 6% was a little more than the 6.2% experts expected. 

Especially as many economists were worried that another cash rate hike by the RBA could push the country into recession. 

We’re in the clear right now, but we can’t rule out the possibility of a future cash rate rise, as the RBA’s target inflation rate is still 2-3%. 

‍So, what happens when interest rates rise?

When the RBA increases the cash rate, the banks will almost always follow suit and raise the interest rate on your loan. 

Experts say it takes around two or three months for individuals to feel the full impact of a rate rise on their cash flow… so the impact of these successive rises won’t be felt until the new year. 

And your interest rate on your savings account should increase too (but often doesn’t increase to the same extent).

Why does it feel like rates are so much higher than usual?

You’re not imagining it, they are! But it probably feels even higher because as recently as May 2022, interest rates were at a historic low of 0.1%.

Here’s a recap of the rises this year:

• May 4th 2022: 0.35%
• June 8th 2022: 0.85%
• July 6th 2022: 1.35%
• August 3rd 2022: 1.85%
• September 6th 2022: 2.35%
• October 4th 2022: 2.60%
• November 1st 2022: 2.85%
• December 6th 2022: 3.1%
• February 7th 2023: 3.35%
• March 7th 2023: 3.60%
• April 4th 2023: 3.60%
• May 2nd 2023: 3.85%
• June 6th 2023: 4.10%
• July 4th 2023: 4.10%
• August 1st 2023: 4.10%

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The cash rate has changed pretty dramatically over the past 16 months, but the good news is, many economists reckon that with no rate rise we might be able to avoid a recession. To learn more about what that means, head over to our article on What’s All This Talk About Recession?