The Reserve Bank has announced a quarter-point reduction in the cash rate to 4.1%.
The decision is a sign the RBA believes inflation is being tamed, and there is room to ease pressure on mortgaged households.
A household with a $750,000 loan will see their monthly repayments reduce by $115 if their mortgage rate falls by 25 basis points, in line with the cash rate decision.
The RBA acknowledged there was a “high degree of uncertainty” about the policies of the Trump administration and how they would affect the global economy. The new tariff regime is widely viewed as inflationary, given consumers will pay for increases in the cost of global goods, which could upset the anticipated rate-cutting cycle.
The central bank’s forecasts have core inflation, its preferred measure that removes volatile prices and government-subsidised measures, falling faster than previously expected, to stabilise at around 2.75% from late this year.
Westpac, NAB and Commonwealth Bank reduce interest rates after RBA cut
Following the RBA’s decision, NAB has announced it would reduce the standard variable home loan interest rate by 0.25%, effective 28 February.
Group executive for personal banking, Ana Marinkovic, said:
The extended period of high interest rates has placed real strain on household budgets and this rate reduction will help to ease the financial burden. We wanted to move quickly after the RBA’s decision to provide customers with certainty.
NAB said that since 2017, it has consistently implemented changes to the standard variable rates after 10 days following an RBA announcement, “regardless of whether the cash rate has increased or decreased.”
Commonwealth Bank also said it would reduce their variable mortgage rates in line with the RBA decision.
Westpac also announced immediately after the rate cut was revealed that it would reduce its variable interest rates on home loans by 25 basis points for new and existing customers, effective 4 March.
Source: theguardian.com
