Homeowners can rest easier - again - with the Reserve Bank of Australia (RBA) deciding yesterday to keep the cash rate unchanged at 4.35%.

This decision marks the ninth month - and sixth meeting - since the RBA upped the cash rate to its current 12-year high.

Not bad for a central bank that increased this figure 13 times - or a total of 425 basis points - between May 2022 and November 2023.

At the same time, the financial industry, including the Big 4 Banks, is warning homeowners not to be complacent about potential hikes or expect cuts soon.

Inflation still hasn't reached the RBA's 2%-3% target figure thus, the central bank is still determinedly utilising its only tool to drop this figure - the national cash rate - to change the situation.

Or, as RBA governor Michele Bullock put it yet again yesterday: "Inflation is proving persistent".

"Inflation to take longer to reach target"

Ms Bullock's inflation points follow the latest Consumer Price Index (CPI) data from the Australian Bureau of Statistics which while they rose, were nonetheless better than expected.

The CPI increased 1% across the June 2024 quarter and reached 3.8% over the year to this period.

Importantly for the real estate industry, the most significant quarterly and annual price rises were in housing - up 1.1% across the quarter and 5.8% in the past year.

Despite the increases, financial experts approved these figures, partly because they were on track with what the RBA had forecasted for this time but also because the more important "trimmed mean" inflation figure dropped slightly to 3.9% in the June quarter.

This makes it the sixth consecutive quarter of lower, annual trimmed mean inflation and a notable drop from the 6.8% peak in the December 2022 quarter.

Side note: in the RBA's first pandemic cash rate increase in May 2022, its target rate inflation prediction was "around 3% by mid-2024".

"Slow and bumpy" return ride to inflation target

Ms Bullock praised such drops yesterday while remaining - as is her want - highly cautious.

"Inflation has fallen substantially since its peak in 2022, as higher interest rates have (brought) aggregate demand and supply closer towards balance," she said, repeating words from her June 2024 announcement.

"And, recent data has demonstrated that the process of returning inflation to target has been slow and bumpy."

As per her earlier cash rate announcements, Ms Bullock added that the country's overall economic outlook continues to endure uncertainty.

Along with inflation persistence, the ongoing strength in the labour market continues. 

Job growth has also decreased while unemployment has lifted slightly.

Ms Bullock's words reflected those in the RBA's quarterly Statement on Monetary Policy which was also released yesterday.

The statement highlighted that inflation will take "slightly longer" to reach its target rate of 2%-3% than was believed in May.

"Underlying inflation is forecast to return to the target range ... in late 2025 and approach the midpoint in 2026 ...  due to greater inflationary pressures in the economy," the report said.

RBA favours short-term steadiness

Yesterday's cash rate decision left the Big 4 Banks unruffled with only the CBA and Westpac now predicting a late 2024 drop.

These two lenders forecast a November rate hike while ANZ and NAB believe this verdict will be passed in February and May 2025 respectively. 

The RBA is also supporting a steadier cash rate in the short term.

At the press conference yesterday following her cash rate announcement, Ms Bullock said the RBA Board considered two major options: hold the 4.35% figure and stay there "for some time" or risk an increase, which required great vigilance.

"But in the near term, cuts are not on the agenda," she said.

Ms Bullock also admitted that monetary policy is a blunt tool but it was the best way to decrease inflation.

"And (doing this) is the key that needs to ultimately be resolved so that households can get on with their lives," she said.

Rate hold won't improve housing trends

As with the finance industry, CoreLogic research director Tim Lawless recommends homeowners and homebuyers advance with cautiousness, rather than complacency. 

He said while the current stable rates and lower inflation should help lift consumer sentiment, it was unlikely this would flow through to housing market activity.

He also doesn't expect the RBA's decision to materially influence housing trends - including affordability barriers and the strengthening of household balance sheets -even if consumer sentiment increases and interest rates fall.

Mr Lawless added that consumer sentiment had largely not impacted current housing trends, such as the property price rises experienced through the housing upswing to date.

These trends are also changing.

"(This) recent growth ... has had more to do with low supply, tight rental conditions and demographic factors than sentiment ..." Mr Lawless said.

"Many of these factors are now losing their potency with the trend rate of home sales easing as affordability becomes more challenging, migration slows and momentum leaves the upswing in rents."

Regarding interest rate cuts, Mr Lawless said that even if this occurs, it may not be enough to revitalise the housing growth cycle.

"There is a possibility that affordability pressures and, eventually, a housing supply response, will keep a lid on price growth even as rates come down," he said.

"But the timing of a rate cut remains uncertain and dependent on the flow of data, especially inflation and labour force outcomes.

"The earliest forecasts have a rate cut pencilled in for November, while market pricing is pointing to February next year."

The RBA’s next monthly cash rate announcement will be on Tuesday, September 24 at 2.30pm AEST. This will be followed by announcements on November 5 and December 10.