As inflation cools in mid-2025, the Reserve Bank is signalling a shift toward cutting interest rates.
For mortgage holders, expectations of lower rates are already influencing repayment strategies, with some opting to refinance in anticipation of reduced costs. A formal rate cut would ease monthly financial pressure, particularly for those on variable loans.
Businesses, too, may benefit from cheaper lending, potentially unlocking investment and expansion plans that had been shelved during the high-rate environment. Increased borrowing confidence could flow through to job creation and stronger economic activity.
But there are risks. Cutting rates too early—especially while other global central banks hold steady—could fuel inflation or put pressure on the Australian dollar. The Reserve Bank’s decisions in the months ahead will be key to balancing recovery with stability.
Dr Steven Enticott is a finance professional, speaker, regular columnist, and author of The Man With A Plan.
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