RBA holds interest rates amid inflation concerns and property market downturn risks
Consensus Summary
The Reserve Bank of Australia (RBA) held interest rates at 4.35 per cent on Tuesday, the same rate set for all of 2024, while warning inflation will remain above the 2 to 3 per cent target until the end of 2027. Governor Michele Bullock stated a 20 per cent property price slump would not risk financial stability, though ANZ economists forecast a 15 per cent drop over this year and next. Sydney and Melbourne house prices are expected to fall by 14.5 per cent and 12.8 per cent respectively, with recovery near 5 per cent in 2028. Auction clearance rates have fallen below 50 per cent for 10 weeks, and economic growth is projected at 1.4 per cent by Christmas and 1.6 per cent by December next year. Financial markets see a 50 per cent chance of further rate hikes late this year, with cuts unlikely before the second half of 2027.
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Key details reported by multiple sources:
- RBA governor Michele Bullock warned property prices could fall by 20 per cent without risking financial crisis
- ANZ economists predicted property prices could slump by almost 15 per cent over this year and next
- RBA kept the official cash rate on hold at 4.35 per cent on Tuesday
- RBA inflation target band is 2 to 3 per cent, with inflation expected to stay above it until the end of 2027
- RBA raised interest rates three times since the beginning of the year
- Financial markets believe there is a 50 per cent chance of a further rate rise late in the year
- Rate relief is not expected before the second half of 2027
- Inflation was 3.8 per cent in June, down from the RBA’s May forecast of 4.8 per cent
- Unemployment was 4.4 per cent in June
- Sydney’s median house price is $1.5 million
- ANZ predicts Sydney house prices will fall by 14.5 per cent from their peak at the start of the year
- Melbourne house prices are tipped to fall by 12.8 per cent from their peak
- Auction clearance rates have been below 50 per cent for the past 10 weeks across the capitals
- Economic growth is forecast at 1.4 per cent by Christmas and 1.6 per cent by December next year
Contradictions
Conflicting information between sources:
- ANZ predicts capital city prices will fall by 4.3 per cent this year and 3.4 per cent in 2027, but the articles do not specify if this is a consensus or conflicting view with other sources
Source Articles
Rate rises still on table: Bullock says even 20% house price slump wouldn’t spark crisis
RBA governor Michele Bullock has warned the bank is willing to keep raising interest rates to curb inflation while flagging property prices could fall by 20 per cent without seriously risking the nation’s financial stability.
Rate rises still on table: Bullock says even 20% house price slump wouldn’t spark crisis
RBA governor Michele Bullock has warned the bank is willing to keep raising interest rates to curb inflation while flagging property prices could fall by 20 per cent without seriously risking the nation’s financial stability.