RBA Cash Rate Target Announcement – June 2015

Rates and Fees verified correct on December 8th, 2016

rba-juneRBA keeps current cash rate at 2.00%

Although many predicted that another cash rate cut was on the cards, several economists correctly predicted that the Reserve Bank of Australia (RBA) would maintain the current cash rate for June 2015.

At today’s meeting, the Board decided to keep the cash rate of 2.00 per cent unchanged.

According to the finder.com.au Reserve Bank Survey, 100 per cent of industry experts (34 respondents) forecast that the RBA would break their trend of easing monetary policy by holding the rate at 2.00 per cent.

However, 68 per cent of these experts believe interest rates will begin to rise in 2016, with some predicting the rate will continue to rise beyond 2016.

Why maintain the cash rate?

With soaring property prices and the recent recovery of commodity prices, the RBA has initiated their “wait and see” strategy by holding the cash rate at 2.00% this month.

As inflation sits comfortably at 1.3 per cent and unemployment drops, the need for a further rate cut has lessened.

It is believed that the RBA has maintained the cash rate so that they can fully assess the impact of the lower cash rate on the economy. In particular, they will wait to observe the influence of a low rate on economic growth, unemployment and investment behaviour in the residential sector.

However, if growth continues in overseas markets such as the US and China, it is probable that the RBA will start tightening monetary policy in the near future.

Interest rates forecast to take a turn

Despite the RBA’s decision to keep the cash rate unchanged, you should start preparing for further rate increases. It is believed that more borrowers will start fixing their home loans in the anticipation of interest rate hikes next year.

The majority of experts (21) predict there will be no cash rate movement for the remainder of this year.

Interestingly, the Associate Professor of Economics at Melbourne Business School, Mark Crosby, forecasts that the cash rate will start rising in the final quarter of 2015.

How high will the cash rate go?

According to the finder.com.au Reserve Bank Survey, industry professionals believe the cash rate will increase to 3.70 per cent, while eight experts are predicting the rate will hit above 4.00 per cent. Two of the survey participants predicted the cash rate would reach as high as 5.00%.

How will this affect me?

Based on the key findings of the finder.com.au Reserve Bank Survey, our money expert Michelle Hutchison said borrowers will begin to lock in fixed home loan rates as a consequence of imminent rate hikes.

"The majority of experts from the Survey (82 percent) are expecting to see more borrowers concerned about rising interest rates and lock in a fixed rate home loan. Of these experts, 21 of which are expecting this will happen this year, while seven don't think more borrowers will fix until next year. There were also four experts who don't think more borrowers will fix at all.

"While it is a good idea to fix your home loan if you're concerned that rates will rise, it's a worry that some experts don't think more borrowers will fix. We're seeing record low numbers of borrowers fixing their home loans and as prices rise and rate hikes on the horizon, some borrowers will be under financial strain if they don't consider fixing while rates are low.”

Belinda Punshon

Belinda is a journalist here at finder.com.au. Specialising in the home loans and property sections, she is passionate about helping Australians improve their financial wellbeing.

Was this content helpful to you? No  Yes

Related Posts

HSBC Home Value Loan - Resident Owner Occupier only

Enjoy the low variable rate with $0 ongoing fee and borrow up to 90% LVR.

ME Bank Basic Home Loan - LVR <=80% Owner Occupier

A low variable rate loan with no application or ongoing fees.

NAB Choice Package Home Loan - 3 Year Fixed (Owner Occupier)

Receive discounts on interest rates with the Choice Package. 250,000 Velocity Frequent Flyer point offer, conditions apply.

Ask a Question

You are about to post a question on finder.com.au

  • Do not enter personal information (eg. surname, phone number, bank details) as your question will be made public
  • finder.com.au is a financial comparison and information service, not a bank or product provider
  • We cannot provide you with personal advice or recommendations
  • Your answer might already be waiting – check previous questions below to see if yours has already been asked

Disclaimer: At finder.com.au we provide factual information and general advice. Before you make any decision about a product read the Product Disclosure Statement and consider your own circumstances to decide whether it is appropriate for you.
Rates and fees mentioned in comments are correct at the time of publication.
By submitting this question you agree to the finder.com.au privacy policy, receive follow up emails related to finder.com.au and to create a user account where further replies to your questions will be sent.

Ask a question
feedback