Inflation falls, raising hopes for an RBA rate cut
Trimmed mean inflation – the Reserve Bank of Australia’s preferred measure of underlying price pressure – dropped from 2.8% in April to 2.4% in May, according to recent figures from the Australian Bureau of Statistics.
This sharp monthly fall suggests inflation is cooling quickly. With this indicator now well within the RBA’s 2-3% target band, anticipation is rising that the RBA could cut rates when the board meets next week.
For mortgage holders, this is welcome news. Lower interest rates would mean reduced monthly repayments for variable-rate mortgages. For new borrowers, a lower cash rate would also mean more affordable borrowing opportunities.
Even if the RBA doesn't cut rates immediately, signs of easing inflation reduce the likelihood of further hikes, providing greater stability and predictability for borrowing costs.
About the author – Alex Veljancevski is a Sydney Mortgage Broker with Eventus Financial, which assists first home buyers, investors, upgraders and borrowers seeking to refinance to a better deal on their home loan.