It's been four years since there was an interest rate cut in Australia. But with the latest figures from the Australian Bureau of Statistics (ABS) showing inflation continuing to fall and the recent September Reserve Bank (RBA) cash rate hold decision, many Australians will be wondering when the next interest rate cut will be. Both consumers and businesses considering taking on finance to buy goods will no doubt be trying to decide if they should buy now with finance, or wait for the highly anticipated interest rate cut?
For many buyers, the timing could be a major consideration. Great buying opportunities are coming up with caravan and boat shows in October and business operators may be looking to upgrade or replace vehicles, plant, equipment in readiness for the new year. Jade Finance provides a summary of data, forecasts and considerations for buyers deciding whether to buy now with finance or wait for an interest rate cut. Information to assist buyers seeking loans for cars, boats, caravans, trucks and business equipment with important timing decisions.
RBA Comments re Interest Rate Cut
At its two-day September meeting, the RBA Board decided to keep the cash rate on hold at 4.35%. In good news for borrowers, the Board said it did not consider a rate hike at the meeting. RBA Governor Michelle Bullock commented that the Board focussed on what had changed since it’s August meeting, and what the Board would need to see in order to decide on a rate rise or rate cut. Nothing was ruled in or out. But commentators noted that this was the first time in several meetings that the Board has not considered a rate rise. Though Ms Bullock did say that a rate cut was unlikely in the near term.
Ms Bullock said that while monetary policy was working broadly as anticipate with no change to the Board’s assessment from its August meeting, there were uncertainties. Uncertainties were noted both in the Australian economy and overseas.
Interest Rate Cut - Economic Indicator Considerations
There have been many remarks and forecasts by financial commentators and others on what should, could and will happen with interest rates. Some lean strongly to a cut at the RBA Board’s December meeting, others look as far out as May 2025.
Looking at the figures that matter to the RBA, headline inflation fell in August to 2.7% down from July’s 3.5%, but underlying inflation remains high, at 3.4%. Underlying inflation is the key figure for the RBA Board. The significant fall in headline inflation is seen primarily as a result of the effect of Government subsidies.
In releasing the latest inflation figures, Ms Michele Marquardt from the ABS noted that the energy rebate from both the Commonwealth and State Governments resulted in electricity pricing falling by 14.6% in the August figures, compared with July’s 6.4%. Calculating figures without these rebates, Ms Marquardt notes that prices for electricity would have increase 0.1% for August and 0.9% for July.
Ms Bullock said that the RBA’s current forecasts have inflation returning to its target in 2026. Commenting that while headline inflation will continue to fall, underlying inflations is still too high, and this is more indicative of the situation.
The US Federal Reserve and central banks in a number of other countries including the UK and New Zealand recently cut their cash rate. In response to a question in the post-decision press conference regarding specifically the US cut, Ms Bullock noted the differences between the US and Australian scenarios. Saying that in the US and in some other countries, both inflation and rates rose to higher levels and these countries were now further along the cycle than Australia.
Personal and Business Finance Timing Considerations
The next monetary policy decision from the RBA is Tuesday 10 December and after that, not until February. Lenders may move to change their interest rates prior to the RBA decisions, based on their own forecasts. For buyers trying to time purchases with finance, we present some considerations to put in the mix when deciding when the right time for you to buy with finance is for them.
Consider if the price of the goods you are intending to buy will increase while you wait for interest rates to come down. Consider, if replacing cars and equipment, if your current goods will require significant repair costs during your wait time. Incurring either of these additional expenses may outweigh any reduction in interest payments should rates go down.
Another consideration is your financial position - credit profile, income and personal or business balance sheet change. If these improve, great. If they deteriorate, you may not be offered a better rate than you may be offered now.
Calculating Repayments with and without an Interest Rate Cut
To work up some tangible figures to consider, use our Finance Calculators. These tools allow users to input whatever figures they like to compare loan scenarios. Enter the current rate we are advertising and then re-calculate with a slightly lower rate, in the event that rates do get cut before you apply.
Make sure you enter the correct rate – the rate applicable to the loan you are considering. Personal Car Loans for example, use our Secured Car Loan rate for new and many second-hand models. Businesses should use the interest rate for their choice of credit facility – Chattel Mortgage, Lease, Rent-to-Own or Commercial Hire Purchase, for the type of asset being acquired – vehicles, plant, machinery and equipment.
If planning to make a deposit, deduct that amount from the total when entering the loan amount required. Remember these are estimates which do not allow for your personal or business credit rating or for the fees and charges that the lender will apply to your loan.
For specific figures to assist in making buying decisions contact Jade Finance and request a quote.
DISCLAIMER: NO LIABILITY IS ACCEPTED IF ERRORS OR MISREPRESENTATIONS ARE FOUND IN THIS ARTICLE. THE ARTICLE IS PREPARED AND PRESENTED FOR GENERAL INFORMATIVE PURPOSES AND IS NOT INTENDED TO BE THE SOLE SOURCE OF INFORMATION FOR MAKING FINANCIAL DECISIONS. THOSE REQUIRING GUIDANCE AND ADVICE SHOULD CONSULT A FINANCIAL ADVISOR.
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