All too soon, it’s almost that time of the month again: the monthly meeting of the Reserve Bank of Australia where a bunch of people vote on whether or not to raise the official cash rate or not. They’ve done it often enough lately, with five rate rises in less than a year – admittedly from a point where rates where tantalisingly low, but still. Every rise means we have to dig a bit deeper in our pockets to make our monthly mortgage repayments and that still hurts.
So, the big question this week is what the Reserve Bank will do when they meet next Tuesday. In the past, you could have placed a bet on whether or not there would be a cash rate rise by going to Centrebet: but recently the Australian Securities and Investments Commission warned Centrebet that accepting bets on such an issue could be illegal (you can still make bets at Sportsbet, though!). You might recall the only other time Centrebet didn’t take bets on interest rate rises recently was back in February when it was agreed by all that a rate rise was a sure thing – yet surprisingly, that was when the Reserve Bank tricked us and kept rates steady.
What does all this mean for the average mortgage holder? Most people agree that there will be at least one more rate rise in the near future, but not all are sure that it will be at the May meeting. Some experts are saying that because wholesale prices are going up, the Reserve Bank will want to increase the cash rate sooner rather than later so that inflation doesn’t get out of control. Others think that the interest rates we currently have are pretty close to average and may not change much. My personal opinion is that rates will go up next Tuesday, but it’s nothing more than a gut feeling. We’ll wait and see.