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Mortgage holders could be waiting until September to see a reduction in their home loan repayment rates as some economists predict the Reserve Bank of Australia (RBA) will not make a further cut at its next meeting in July.
RBA governor Michele Bullock said the board had considered a 0.50 per cent cut before reaching consensus on the 0.25 per cent reduction to the cash rate target.
“Does it mean we’re headed into a long series of interest rate cuts? I don’t know at this point,” she said on Tuesday afternoon.

She referred to the 0.25 percent reduction as “cautious,” noting it was done “with an understanding that we can act promptly if necessary. We have room to maneuver.”

A graph showing interest rate movements in Australia over the last four years.

How interest rates have risen and fallen in Australia

What do economists make of the decision?
Betashares chief economist David Bassanese said Bullock’s explanation suggested the RBA was not “seriously considering” not cutting interest rates on Tuesday.
“That tells me that a rate cut was definitely on the table. The only question was the size,” he told SBS News.
“There’s an element of stability that’s returned to markets. Recession fears have eased, and so they don’t need a big cut of 0.5 per cent.”
He flagged that trimmed mean inflation, one of the board’s most valued economic indicators, was within its target range of 2–3 per cent and sat at 2.9 per cent in the most recent March quarter data.

“The RBA anticipates inflation will reach 2.6 percent, so if that occurs, they can restore rates to typical levels, which I believe is under three percent,” he mentioned.

RSM Australia economist Devika Shivadekar said the reduction was “welcome news” for businesses.
“Financing has been quite restrictive, and given low productivity, businesses would have been struggling. Even though inflation was going down, costs have been higher,” she told SBS News.
She described trimmed mean inflation as consistently reducing, which could underpin further rate cut decisions.
The RBA’s next opportunity to cut rates is at its 8 July meeting, but some economists say that’s too soon for a cut, with a reduction more likely at its August meeting.

After a rate cut, it can take at least a month to see your loan payments reduce, and some banks do not automatically pass on the savings.

When will the RBA cut rates again?
AMP chief economist Shane Oliver said there was a 50 per cent chance there could be a cut in July but the most likely scenario was that the RBA would keep the rate on hold at 3.85 per cent.
“Our base case is for 0.25 per cent cuts in each of August, November and February, taking the cash rate to 3.1 per cent,” he told SBS News.
Bassanese also predicted the same reductions in August and November, anticipating “one more rate cut next year”.

Shivadekar anticipated a 0.25 per cut each quarter of 2025 and had correctly forecast a cut in February and May this year.

A chart showing the Consumer Price Index and trimmed mean inflation

Source: SBS News

Looking forward, she also predicted 0.25 per cent cuts in August and November.

“That would leave the cash rate at 3.35 per cent at the end of the year. Looking to next year, the RBA will have a lot to consider domestically and globally,” she said.
Key quarterly inflation data for the June quarter will only be released after the board’s July meeting, meaning the RBA could hold the rate until August, when it has access to that important data.

However, the decision to change the cash rate target is ultimately up to Bullock and her board.

What to watch in the meantime?

Oliver flagged a number of upcoming domestic data releases that would weigh into the RBA’s decision-making, as well as news from overseas.
But the three economists agreed that quarterly inflation data, due to be released 30 July and 29 October, were the most critical to managing Australia’s economy.
Shivadekar also flagged that “soft” data, like consumer confidence, would also be key.
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