The window for an RBA rate cut in 2024 is closing fast.
Through early 2024, many borrowers were holding out hope for an interest rate cut before the end of the year. By mid-2024, those hopes had faded considerably. The RBA had signalled it was unlikely to cut the cash rate until 2025, and market economists were reassessing their timelines.
The cash rate had been sitting at 4.35% since November 2023. Inflation was not falling fast enough to give the RBA the confidence it needed to ease, and several structural factors were keeping prices higher than expected.
This article covers why rate cut hopes in 2024 have dimmed, what is driving the persistent inflation, and the practical steps homeowners, buyers and investors can take to navigate the environment.
Why cuts were delayed
The RBA had originally hinted that rate cuts could begin in the second half of 2024. By mid-year, that timeline had been pushed out. Inflation was not expected to return to the 2-3% target band until the second half of 2025 at the earliest.
Several factors were contributing to inflation staying stubbornly above target:
Most economists still expected a rate-cut cycle to begin eventually, but the window for 2024 had narrowed to the point where many considered it effectively closed.
What the banks were saying
The major banks had their own views on the timing of cuts, and they were not fully aligned. By mid-2024:
The divergence between the banks reflected genuine uncertainty about the inflation outlook. A quarterly inflation print of around 0.8-0.9% in the second half of 2024 was seen as roughly consistent with a hold or a cut. Anything higher would likely delay cuts further.
For borrowers, the practical implication was clear: do not build your budget or property plans around an assumed rate cut in 2024. Planning around the current rate settings, with cuts treated as a potential upside rather than a certainty, was the more prudent approach.
Strategies for homeowners
If you own a home and are feeling the pressure of elevated repayments, there are concrete steps you can take right now without waiting for the RBA to act.
Strategies for buyers and investors
For prospective buyers, the delayed cut timeline does not mean you should put your plans on hold indefinitely. Property values in the major markets were continuing to rise through 2024 even with rates elevated. Waiting for cuts that are further away than expected can mean paying more for the same property.
Instead, focus on what you can control. Make sure your borrowing capacity is optimised, your deposit is as strong as possible, and your loan structure is appropriate for your situation.
For investors, the key question in mid-2024 was whether your current strategy still stacked up under the prevailing rate environment. Review the yield on any existing investment properties against your current loan costs. If you are holding properties that were borderline viable at lower rates, now is the time to reassess.
Also worth watching: the possibility of Australian bond yields moving out of step with other countries. If the RBA held or hiked while the US Federal Reserve and other central banks were cutting, Australian yields could diverge from global trends, which has implications for fixed-rate pricing.
Not sure whether now is the right time to act on your loan? Our guide on whether to refinance now or wait walks through the key questions to ask before making a decision.
Looking ahead
The RBA’s approach through 2024 reflects a broader truth about monetary policy: the bank moves slowly and deliberately, based on data rather than sentiment. Inflation that is sticky and broad-based requires patience from the RBA and from borrowers.
For most Australians, the best response to a prolonged high-rate environment is not to wait and hope. It is to actively manage your loan, stay informed about the rate outlook, and make sure your financial structure is as efficient as possible.
For more context on how the August 2024 cash rate decision shaped up given the inflation data at the time, read our article on the RBA cash rate prediction for August 2024.
Common questions
Q: Why hasn’t the RBA cut rates yet in 2024?
The RBA needs inflation to be reliably within the 2-3% target band before it will cut. With annual CPI still running at around 3.8% in mid-2024, the board does not yet have the confidence it needs. Structural factors like housing costs, government spending and migration are keeping prices elevated, which means the path back to target is taking longer than earlier forecasts suggested.
Q: Will rates fall in 2025?
Most major banks were forecasting the first rate cut to occur between November 2024 and February 2025, though many flagged the risk of further delays. Whether cuts arrive in early 2025 or later depends primarily on how quickly inflation continues to moderate. Watch the quarterly CPI releases for the clearest signal.
Q: Should I be buying property right now or waiting for rates to fall?
Trying to time a property purchase around rate cuts is difficult, and the evidence suggests it often backfires. Property values in Sydney and Melbourne were still rising through 2024 despite elevated rates. If your finances are ready and the right property is available, buying now and potentially refinancing to a lower rate later is often a better strategy than waiting. A mortgage broker can help you assess whether your position is strong enough to move forward.