- September 14, 2023
- Posted by: Rogers Property Group
- Categories: Australian Property Market, Latest News, Property Investment
Interest rates have now been on hold since June with the cash rate at 4.1%. Most forecasters are anticipating that the rate will sit flat for a while before potentially coming down in 2024.
Interest rates typically go up because the RBA uses interest rates as a rudder or mechanism to bring inflation down. The RBA guidelines are for inflation to be running at between 2-3%. If inflation drops below that, they will drop interest rates to increase inflation. If inflation goes higher than that, they will then increase rates to try and bring inflation down.
Unfortunately, the RBA has been doing a pretty poor job of managing that process under Philip Lowe. Who I might add is now being kicked out mid-September. His decisions actually allowed inflation to run rampant and has now has to make drastic rate increases to try and bring it under control.
The current level of inflation is 0.8% for the last quarter. (April, May, June) When we annualise that number it comes out to 3.2% which is just outside the RBA guidelines. It would be highly unlikely that RBA would raise rates unless there is some sort of drastic increase in inflation over the next couple of weeks.
If we avoid a rate increase in September, we would comfortably assume that rates have peaked and that the next step may be a rate drop in 2024.