Written by Kyle Weltman

Something on everyone’s mind is what will happen to rates in 2024

As cost-of-living pressure increases on everyday households and with rates having gone up numerous times in 2023, most of us are asking when rates will finally go down.

To put this in context, the Reserve Bank of Australia (RBA) lowered the cash rate for over a decade, and then from May 2022 to November 2023, there were 13 increases.

This put pressure on mortgage holders, aided by commentary in 2021 by the then-RBA Governor, who said that “the cash rate is very likely to remain at its current level until at least 2024”.

So why so many increases? The RBA is targeting high inflation in order to sidestep a national economic recession.

The Consumer Price Index (CPI) peaked in December 2022 at 7.8 per cent, but despite the numerous interest hikes, the Quarterly CPI average in September was 5.4 per cent. This is still well above their targeted 2 – 3 per cent range.

The RBA’s strategy to avoid inflation is to keep an eye on the cash rate. Increased Inflation could result in much higher interest rates and unemployment.

While there are many factors that determine the Cash Rate (US Federal Reserve Rates are important, too), the RBA’s main focus seems to be their CPI range target.

So, will interest rates reduce in 2024?

No one can be sure, but here are the big four bank’s predictions:

CBA: Reduction in Sept 2024. Their thoughts are “The RBA will lower the cash rate by 75bp in H2 2024, starting in September, and a further 75bp in H2 25, as inflation comes back into the RBA’s 2 – 3 per cent target range slightly earlier than the RBA forecasts itself”.

Westpac: Reduction in Sept 2024. The Bank is forecasting rates to reduce in September 2024 with the Cash Rate to be at 3.85 per cent by the end of December 2025.

ANZ: Reduction in Nov 2024. ANZ Senior Economist Adelaide Timbrell has predicted the cash rate will only go down in November 2024.

NAB: Reduction in Dec 2024. The Bank is forecasting the first rate deduction at the end of 2024 with a prediction of a 3.1 per cent cash rate by the end of December 2025.

Please be aware these are just predictions to give you some insights and are subject to the bank’s modifying their projections.

2024 Reserve Bank Board meetings

A reminder that instead of monthly meetings, going forward, the RBA will meet eight times this year, with dates scheduled as follows:

  • 5–6 February
  • 18–19 March
  • 6–7 May
  • 17–18 June
  • 5–6 August
  • 23–24 September
  • 4–5 November
  • 9–10 December

If you have any questions about rates or wish to discuss your specific situation, please do not hesitate to contact us.