For the first time in almost a year, homeowners can breathe a sigh of relief, with the Reserve Bank of Australia (RBA) pausing national cash rates today at 3.6%.

The Big Four Banks were split on whether the RBA would do this, or decide to up the cash rate for the 11th simultaneous month to reach 3.8% - or more.

But this afternoon's announcement from RBA governor, Dr Phil Lowe, had homeowners across the country - as well as potential buyers - cracking open the champagne.

Yet whether such celebrations will continue even in the short term is still very much up in the air.

"Inflation has peaked in Australia"

Along with the RBA board pausing the cash rate came its highly encouraging news that inflation has - finally - peaked in Australia.

This news had already been indicated in the Australian Bureau of Statistics' (ABS) monthly CPI indicator in February, which showed that for the third month in a row, the country is experiencing "disinflation".

Australia's CPI figure is now 6.8% as compared to 7.4% in January and 8.4% in December 2022.

There were still plenty of concerns as to whether this latest data would be enough to move the RBA to pause its unrelenting cash rate rises - the sharpest annual spike since 1989.

And indeed, last month's - and now, this month's - 3.6% figure amounted to an 11-year cash rate high for the country.

However, Dr Lowe explained that the central forecast was for inflation to continue to decline for the remainder of 2023 and also 2024, and reach around 3% - the RBA's long-time target - in mid-2025.

The RBA board's decision to stall the cash rate was also based on the following:

• Goods price inflation to moderate over the months ahead, due to global developments and softer demand in Australia 
• Rent increasing at the fastest rate in some years, with vacancy rates low in many parts of the country
• Rising utility prices

"Stop for a while ... assess ... and sit still"

Dr Lowe had already told the Australian Financial Review Business Summit in early March that before today's monthly cash rate announcement, the RBA would receive data on employment, retail and consumer spending, and business surveys and sentiments.

He notably told the summit that this data would help the RBA make its next decision about cash rates - and clearly, it has.

“As you increase interest rates higher, you get closer to the point where it is appropriate to stop for a while and just assess the flow of data," Dr Lowe told the summit.

"We’ve done a lot in a short period of time and at some point, it’s going to be appropriate to sit still and assess the collective effects of that.”

Will we see another cash rate rise in 2023?

Even before today's RBA announcement, homeowners and every economic industry in between were trying to answer this question.

But Dr Lowe today indicated that we could well see another rate rise before year's end - it all depends on the "economic outlook".

"The board took the decision to hold interest rates steady this month to provide additional time to assess the impact of the increase in interest rates to date, and the economic outlook," he said.

Dr Lowe added that the pause would also allow the board more time to assess the state of the economy "in an environment of considerable uncertainty".

"In assessing when, and how much further, interest rates need to increase, the board will be paying close attention to developments in the global economy, trends in household spending, and the outlook for inflation and the labour market," Dr Lowe said.

What the cash rate pause means for the property market

CoreLogic's executive research director, Tim Lawless, remained cautiously optimistic about today's RBA announcement.

"While a pause doesn’t necessarily mean interest rates hikes are ‘done’, it is likely the tightening cycle is close to topping out," Mr Lawless said.

"And while the RBA has left the door open for further hikes .... most forecasts have interest rates either at a peak or almost at a peak, with one more hike in the wings."

In the meantime, Mr Lawless highlighted that the cash rate pause could see an "increased level of certainty around the rate hiking cycle flow(ing) through to an improvement in consumer sentiment".

"We know that consumer sentiment and housing market activity have a close relationship, so any upwards movement in spirits could see more buyers and sellers returning to the market, although we would need to see sentiment lift materially before returning to average levels," he said.

"The performance of housing values will be an important trend to watch, as they’re a significant contributor to household wealth.

"If wealth effects from higher housing values trigger more consumer spending, this may have an impact on the trajectory of interest rates."

However, as he noted in February, Mr Lawless remains concerned as to whether even today's pause will see keen buyers being too far beyond the 3% serviceability assessment buffer, introduced by APRA in October 2021.

"With the cash rate setting either peaked or close to peaking, we could see increased debate around APRA’s serviceability buffer policy ... as it may be unnecessarily restricting credit availability for housing," he admitted.

He added that even so, positive momentum looked to be returning to Australia's housing markets, in the form of low advertised supply, the tightest rental conditions on record, and surging overseas migration.

Certainly, in an overall sense, the song remains the same as it did a year ago, with the RBA remaining determined to "return inflation to a 2-3% target ... while keeping the economy on an even keel."

But for the next month at least, homeowners can enjoy a reprieve.

The RBA's next monthly cash rate announcement will be on Tuesday, May 2, 2023, at 2.30pm AEDT.