In her first month as the RBA Governor, Michele Bullock has pulled the boss move of holding the cash rate at 4.10%.

That’s serious main character energy, and we’re here for it. Cheers Govnah!

The cash rate has now stayed steady for the last four RBA meetings - since June 2023.

This is especially good news as some economists were afraid that we’d be back in rate-rise-territory after annual inflation ticked upwards from 4.9% in July to 5.2% in August.

This uptick was largely due to volatile items like automotive fuel, fresh produce and holiday spending.

These are items that can change in price based on external conditions like weather, time of year, or supply disruptions.

So it can be helpful to exclude these items from the CPI calculation to see what underlying inflation actually looks like.

The good news is, with these volatile items excluded, the annual rise of inflation is 5.5% in August, which is lower than the 5.8% figure in July.

So overall inflation is still trending downwards.

And another month of a steady cash rate is massive relief for mortgage holders, 36% of whom struggled to pay their home loan in September.

So what does the crystal ball say?

Some economic experts, including three of the big four banks reckon we’ve seen the top of the cash rate. In other words, it will stay at 4.10%... and then begin to drop when inflation comes down to the RBA’s desired range of 2%-3%.

But other experts believe that the RBA still has one more cash rate rise left in them before the end of the year. 

Remind me, what happens when interest rates rise?

When the RBA increases the cash rate, the banks will almost always follow suit and raise the interest rate on your loan. 

Experts say it takes around two or three months for individuals to feel the full impact of a rate rise on their cash flow… so the impact of these successive rises won’t be felt until the new year. 

And your interest rate on your savings account should increase too (but often doesn’t increase to the same extent).

Why does it feel like rates are so much higher than usual?

You’re not imagining it, they are! But it probably feels even higher because as recently as May 2022, interest rates were at a historic low of 0.1%.

Here’s a recap of the rises this year:

• May 4th 2022: 0.35%
• June 8th 2022: 0.85%
• July 6th 2022: 1.35%
• August 3rd 2022: 1.85%
• September 6th 2022: 2.35%
• October 4th 2022: 2.60%
• November 1st 2022: 2.85%
• December 6th 2022: 3.1%
• February 7th 2023: 3.35%
• March 7th 2023: 3.60%
• April 4th 2023: 3.60%
• May 2nd 2023: 3.85%
• June 6th 2023: 4.10%
• July 4th 2023: 4.10%
• August 1st 2023: 4.10%
• September 4th 2023: 4.10%
• October 3rd 2023: 4.10%