RBA keeps rates on hold, but for how long?

October 13, 2023

The Reserve Bank of Australia has held the cash rate steady for the fourth consecutive month, but a recent uptick in inflation has left the door open to another hike before Christmas.  

Delivering her first interest rate decision as RBA governor since taking over from Philip Lowe last month, Michele Bullock said the board held the official cash rate steady at 4.1% in October, where it’s remained since June.


New RBA governor Michele Bullock took over the top job in September. Picture: NCA NewsWire / Martin Ollman

However, Ms Bullock didn’t rule out further rate hikes in the months ahead after rising fuel, rent and services costs pushed annual inflation back above 5% in August.

“Inflation in Australia has passed its peak but is still too high and will remain so for some time yet,” Ms Bullock said.

“Timely indicators on inflation suggest that goods price inflation has eased further, but the prices of many services are continuing to rise briskly and fuel prices have risen noticeably of late.

“Some further tightening of monetary policy may be required to ensure that inflation returns to target in a reasonable timeframe, but that will continue to depend upon the data and the evolving assessment of risks.”

Price movements can be volatile from month to month. When stripping out some products with big price swings – such as petrol, fruit and holiday travel – the Australian Bureau of Statistics said inflation actually eased during the month.


PropTrack senior economist Eleanor Creagh said inflation is expected to continue moving lower amid weakening household consumption and slowing economic activity.

“The full impact of monetary tightening to date is yet to be felt and we’re likely to continue to see inflation moving lower as a result,” Ms Creagh said.

“The significant increase in mortgage servicing costs, together with cost-of-living pressures, has seen consumer spending slow and weigh on economic activity. Conditions are expected to further soften in the coming months.”

Ms Creagh said the decision to hold the cash rate steady again will underpin buyer and seller confidence for the spring selling season.

“Looking ahead, interest rates have very likely peaked and population growth is rebounding strongly,” she said.

Home prices hit record high

The rate decision comes as home prices hit record highs in September, with the national median price rising 0.35%.

The latest PropTrack Home Price Index showed the price falls of last year — triggered by rising interest rates — had been completely erased across much of the country, bringing the cost of a typical Australian home to its highest ever level.

Ms Creagh said national home prices had now reversed 2022’s price falls in their entirety, with September marking the ninth consecutive month of national home price growth.

“One driver of the recovery in home prices this year has been the subdued listings environment, which has seen buyers competing for fewer properties,” she said.

“Together with a shortage of new home builds, prices are expected to rise and more markets will likely reach new record levels after recouping last year’s fast falls.”

National home price activity in September:


The spring selling season has had a busy start, with buyer and seller confidence rising and choice improving significantly across the major capitals.

Mortgage Choice chief executive Anthony Waldron said loan submissions data signalled a pickup in buying activity, with a 7% increase in purchases during September, while refinancing activity fell 6%.

“The largest proportion of loans coming off a fixed term occurred earlier this year, and with interest rates holding steady for several months, our submission data is showing a slowdown in refinancing activity,” Mr Waldron said.

“The data also reflects the busy spring selling season, which is resulting in more properties coming to market and giving more buyers opportunity to buy.

“With the spring season well underway, and Christmas fast approaching, hopeful buyers will need to act quickly if they want to buy property this calendar year.”

One more rate hike may come before Christmas

While the RBA was widely expected to hold the cash rate steady in October, economists are divided on the outlook, with some expecting one more rate hike before the end of the year.

HSBC chief economist Paul Bloxham said although inflation is now heading towards the RBA’s 2-3% target band, it may not be headed there “quite fast enough”.

“The good news is that the Australian economy appears to be traversing a ‘narrow pathway’ to dis-inflate with a ‘soft landing’ for growth, largely as the RBA had hoped,” Mr Bloxham said.

“However, with inflation still well above the RBA’s target band and the jobs market still fairly tight, we expect that the RBA’s next rate move is still more likely to be up than down.”


Stubborn inflation could see the RBA move one more time this year. Picture: Getty

HSBC is forecasting one more 25 basis point hike before Christmas, likely at the November meeting after quarterly inflation data is released at the end of October.

NAB chief economist Alan Oster also expects one more rate hike with November the most likely timing.

“The recent run of activity data suggests there may be some downside risk to this, but the resilience in the labour market and potential for ‘sticky’ services still present an upside risk,” Mr Oster said.

Other economists anticipate the cash rate has already peaked, with ANZ, CBA, Westpac and AMP forecasting an extended pause until next year when cuts are expected.

With hundreds of thousands of borrowers yet to roll off their fixed rates in the coming months, Mr Waldron said borrowers should start preparing now.

“I’d recommend these borrowers make time to speak to their broker and ensure they’re prepared for the change in their repayments when their fixed term comes to an end.”

Analysis from realestate.com.au reveals borrowers who roll onto their bank’s standard variable rate at the end of their fixed loan term rather than refinancing could be paying tens of thousands of dollars in additional interest each year.

Source: realestate.com.au



You might be also interested in

Gettyimages 2006354243
Federal Budget 2024: $6.2b housing splash
The federal government has unveiled $6.2 billion in new housing spending in this year’s budget, with a major focus on housing for Aussies doing it tough. With near record low
Money 7864149cfb2
Federal Budget 2024: How this year’s budget tackles the rising cost of living
Tax cuts, energy bill relief and rent assistance are among the measures in this year’s federal budget aimed at bringing down the rising cost of living. Federal treasurer Jim Chalmers
Gettyimages 622528618
Is the mortgage loyalty tax a thing of the past?
New and existing home loan customers are now paying almost the same interest rates, with the difference shrinking to the smallest it’s been in the past five years. Since the
West Hoxton
Budget 2024: The roads, rail and regional hotspots getting billions
The 2024 federal budget has unveiled a range of initiatives aimed at tackling Australia’s housing issues head-on, but it’s also provided billions of dollars to build more infrastructure across the
Capi 1e0e766d2d5233a56cca5d4cd86b5710 09df85bc29deb103c8cadb5a2c2c7897
Cost of living: underinsurance effects 200,000 Aussies
Rising costs and affordability challenges has pushed Australia into an underinsurance crisis, which could cost homeowners hundreds of thousands of dollars when faced with disaster. In Australia, 13.1 million homeowners
Gettyimages 908296490 88041054c55
Biggest surprises of Australia’s rental market revealed
In some parts of Australia, rents are bafflingly high, while in others, they’re surprisingly affordable. In some cities, it’s the areas you’d least expect that are showing the highest rental
Higher for longer? The new cash rate paradigm
Research Director Tim Lawless unpacks what today’s cash rate decision means for the housing market. The interest rate outlook has changed remarkably in a short space of time. It was
Capi Eaca2a4a670f7182c240bbb3ada7028a Dde6cc44b571f6374cf0e9f8edab769b
Rent crisis: Vast majority of Victoria now home to ‘extreme rental pain’, but silver lining for Docklands
More than three-quarters of Victoria is now in extreme rental pain after the state notched the second-fastest rent rises in the country across the past year. But there are signs
Frankston 913595467e9
Why now is the time to invest in this unloved state, and where to buy
Victoria’s property investment prospects remain strong despite prices going backwards and an ‘outrageous cash grab’ by the state government that has prompted many investors to flee, according to property experts.
Gettyimages 1222002808
Are higher interest rates forcing investors to sell up?
More landlords in Melbourne and Sydney are selling off their investment properties compared to a year ago, new research suggests. PropTrack data shows the estimated share of home sales in

Get your Free Property Guide.

Here goes your text ... Select any part of your text to access the formatting toolbar.

Get your free Sales Report for RBA keeps rates on hold, but for how long?

Get your free Sales Report for RBA keeps rates on hold, but for how long?

Subscribe to hear the latest

Start The Conversation Today.

Call us on:

1300 850 730

Request a Callback:

Send us a Message:

Privacy Policy

Get your Free Property Guide

Get your free Suburb Report for RBA keeps rates on hold, but for how long?

Privacy Policy

Who we are

Suggested text: Our website address is: https://motionproperty.com.au.


Suggested text: When visitors leave comments on the site we collect the data shown in the comments form, and also the visitor’s IP address and browser user agent string to help spam detection.

An anonymized string created from your email address (also called a hash) may be provided to the Gravatar service to see if you are using it. The Gravatar service privacy policy is available here: https://automattic.com/privacy/. After approval of your comment, your profile picture is visible to the public in the context of your comment.


Suggested text: If you upload images to the website, you should avoid uploading images with embedded location data (EXIF GPS) included. Visitors to the website can download and extract any location data from images on the website.


Suggested text: If you leave a comment on our site you may opt-in to saving your name, email address and website in cookies. These are for your convenience so that you do not have to fill in your details again when you leave another comment. These cookies will last for one year.

If you visit our login page, we will set a temporary cookie to determine if your browser accepts cookies. This cookie contains no personal data and is discarded when you close your browser.

When you log in, we will also set up several cookies to save your login information and your screen display choices. Login cookies last for two days, and screen options cookies last for a year. If you select “Remember Me”, your login will persist for two weeks. If you log out of your account, the login cookies will be removed.

If you edit or publish an article, an additional cookie will be saved in your browser. This cookie includes no personal data and simply indicates the post ID of the article you just edited. It expires after 1 day.

Embedded content from other websites

Suggested text: Articles on this site may include embedded content (e.g. videos, images, articles, etc.). Embedded content from other websites behaves in the exact same way as if the visitor has visited the other website.

These websites may collect data about you, use cookies, embed additional third-party tracking, and monitor your interaction with that embedded content, including tracking your interaction with the embedded content if you have an account and are logged in to that website.

Who we share your data with

Suggested text: If you request a password reset, your IP address will be included in the reset email.

How long we retain your data

Suggested text: If you leave a comment, the comment and its metadata are retained indefinitely. This is so we can recognize and approve any follow-up comments automatically instead of holding them in a moderation queue.

For users that register on our website (if any), we also store the personal information they provide in their user profile. All users can see, edit, or delete their personal information at any time (except they cannot change their username). Website administrators can also see and edit that information.

What rights you have over your data

Suggested text: If you have an account on this site, or have left comments, you can request to receive an exported file of the personal data we hold about you, including any data you have provided to us. You can also request that we erase any personal data we hold about you. This does not include any data we are obliged to keep for administrative, legal, or security purposes.

Where your data is sent

Suggested text: Visitor comments may be checked through an automated spam detection service.

Get your Free PDF copy of Make Money Simple Again