Will we see a Melbourne Cup rate cut?

The RBA is expected to leave the cash rate on hold at 1.5 per cent when it holds its annual Melbourne Cup day meet tomorrow. 

Higher than expected inflation figures and easing headline unemployment data have drastically reduced the chances Australian borrowers will see a cut until early 2017, says RateCity data insights director Peter Arnold. 

“A confluence of global factors, including the US Presidential Election on November 8 and Federal Reserve rates meeting, will no doubt also weigh on the mind of recently-appointed governor Phillip Lowe when he makes his call tomorrow,” he says. 

Arnold says while a pre-Christmas rate cut would inject some consumer confidence into the market, there are many lenders still offering sub 4 per cent rates (see below). Switching to a low cost lender could deliver the same benefit, if not greater benefit, to borrowers as a 0.25 per cent RBA cash rate cut, he says. 

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