RBA Keeps Interest Rates Unchanged at 3.85%: What It Means for Australian Homeowners

The Reserve Bank of Australia has decided to keep interest rates steady at 3.85%, surprising many who expected a rate cut. This means there will be no additional mortgage relief for Australian households. The decision was influenced by weak growth at the beginning of the year, inflation at 2.1%, and concerns about the impact of global trade tensions caused by Donald Trump's policies.

The RBA board was divided, with six members voting to maintain rates and three voting for a cut. They stated that they needed more information to confirm that inflation is under control. The Australian dollar rose after the announcement, reaching US65.5c.

Treasurer Jim Chalmers expressed disappointment, noting that the decision was not what many Australians were hoping for. He highlighted the progress made in managing inflation, which led to two rate cuts earlier in the year. The RBA's decision to hold rates will allow them to monitor the effects of trade tensions before making further changes.

Economist Krishna Bhimavarapu found the decision puzzling given the economy's weak momentum. He suggested that the cash rate could drop to 3.1% by the end of the year, with a potential larger cut in August.

According to the source: The Guardian.