As Home Owners get some relief
By Kwedu News
The Reserve Bank of Australia announced a 0,25% reduction in the cash rate yesterday, bringing much needed relief to millions of home owners though many would have expected a bigger reduction.
In a media release after its board meeting,the central bank said
” ..the board decided to Lower the cash rate target to 4.10 % and the interest rate paid on Exchange settlement balances to 4%..
It is a reprieve for mortgage borrowers after the central bank hiked rates on 13 occasions between May 2022 and November 2023, before leaving the cash rate on hold for more than a year.
RBA governor Michele Bullock said the Bank cited a fall in inflation as one of the the reasons for the reduction.
” ..Inflation has fallen substantially since the peak in 2022..in December underlying inflation was 3.2% which suggests inflationary pressures are easing a little more quickly than expected..There has also been subdued growth in private demand and wage pressures have eased.These factors give the board confidence that inflation is moving sustainably towards the mid point of the 2 to 3 % target range…”
While the Bank the welcomes progress on inflation, it remains cautious on prospects for further policy easing and reductions stressing that the outlook remains uncertain.
” Growth in output has been weak, private domestic demand is recovering a little more slowly than expected and there is uncertainty around the extent to which the recovery in household spending in late 2024 will persist. Wage pressures have eased a little more than expected, housing cost inflation is abating and businesses in some sectors continue to report that it has been hard to pass on cost increases to final prices.'” the bank said.
The bank added that it will remain resolute in its determination to return inflation to target and will do what is necessary to achieve that outcome.
While most home owners would have asked for a bigger rate reduction some expressed relief that they will be able to save money on mortgage payments.
” It’s better than nothing. Collectively, we will be able to save $200.00 per month going forward. This is better than nothing ” said one home owner from Sydney.
