RBA leaves cash rate at 4.10% at April meeting

The Reserve Bank of Australia (RBA) kept the cash rate at 4.10% at its April meeting. Over the past few months inflation has continued to dissipate, albeit slowly. In addition, the unemployment rate has remained relatively stable. However, the United States’ trade tariffs have raised global economic uncertainty and concern.

The RBA's latest statement on monetary policy  revealed inflation has dropped significantly since its peak in 2022, with higher interest rates helping to balance demand and supply. Recent data suggests that underlying inflation is continuing to ease in line with the latest forecasts.

“Nevertheless, the Board needs to be confident that this progress will continue so that inflation returns to the midpoint of the target band on a sustainable basis. It is therefore cautious about the outlook.

The Board noted that monetary policy is well placed to respond to international developments if they were to have material implications for Australian activity and inflation.”

– RBA Statement by the Monetary Policy Board

In February, Australia’s central bank made the first reduction in the cash rate since November 2020. Between May 2022 and November 2023, the RBA embarked on a series of aggressive rate hikes in response to soaring post-pandemic inflation.

Why did the RBA keep the cash rate on hold?

The decision to leave the cash rate unchanged comes as inflation has cooled from its peak in 2022. In February, inflation eased slightly, with the monthly Consumer Price Index (CPI) rising 2.4% over the year, down from 2.5% in January – within the RBA’s target range of 2-3%. Meanwhile, the jobless rate held steady at 4.1%, even as 53,000 positions were shed.

Despite this, the potential for underlying inflationary pressures remain, especially in areas like housing and services, which have continued to exert upward pressure on prices. 

The RBA opted to keep the cash rate steady, in an effort to support economic growth without triggering inflationary risks. The Board noted uncertainties about the outlook for domestic economic activity and inflation, while the outlook abroad also remains quite unpredictable.

"On the macroeconomic policy front, recent announcements from the United States on tariffs are having an impact on confidence globally and this would likely be amplified if the scope of tariffs widens, or other countries take retaliatory measures," according to the RBA's statement.

"These developments are expected to have an adverse effect on global activity, particularly if households and firms delay expenditures pending greater clarity on the outlook... Sustainably returning inflation to target within a reasonable timeframe is the Board’s highest priority."

Markets and banks accurately predict RBA rate call 

In the lead-up to the April RBA meeting, all of the Big Four banks and the majority of market commentators widely anticipated that the central bank would not alter the cash rate. 

In its statement on monetary policy, the RBA Board indicated that it wants to wait for clearer signs and fresh data that show both headline and core inflation will remain sustainably within target range before making further reductions in 2025.

When will the RBA cut rates again?

Given there was no change this month, the big question remains: when will the RBA move again? The central bank has signalled that future decisions will depend on incoming economic data, particularly inflation, wages, and employment figures.

“While the RBA is expected to cut the cash rate once more this year at the very least, it's going to want to make sure that inflation is well under control. 

The bank will still be nervous about the low level of unemployment potentially stoking wages and feeding into inflation. But also how the expected tariffs from the USA are going to land and the reaction of markets to that news. 

They will have a much better picture by the time their next meeting rolls around.”

– Mozo finance expert Peter Marshall

Although inflation has eased, underlying price pressures in housing and services remain a concern. The RBA will likely take a measured approach, ensuring inflation stays within the target range before committing to further cuts.

Market economists are split on the timing of the next rate move. Some predict another cut as early as mid-2025 if economic conditions soften, while others suggest the RBA may wait until later in 2025 to avoid stoking inflationary risks.

CBA, NAB and Westpac economists expect rates to go down again in May, while ANZ thinks there will only be one more cut in August.

All eyes will be on the upcoming RBA meetings and key economic releases in the months ahead, as policymakers weigh the balance between growth and inflation.

For a deeper dive into what’s influencing the RBA’s next steps, stay tuned to our live interest rates blog. You can also read Mozo’s news archive for relevant updates and information.

What does this mean for borrowers?

For borrowers and businesses, this means ongoing uncertainty. Most home loan providers passed on February's rate cut in full. However, it’s unlikely we’ll see similar movements this month, given the RBA’s decision to keep the cash rate at 4.10%.

Today’s outcome means many prospective buyers may want to compare home loan options, while existing mortgage holders will be considering next steps, such as refinancing.

"If you're a borrower holding out for another rate cut, maybe it's time to ask yourself why you're waiting for the RBA to cut your rate for you, when there's ample opportunity to give yourself a bigger rate cut by shopping around," Mozo money & finance expert Rachel Wastell said.

Homeowners facing costly mortgage repayments may want to consider their options. Switching to a lower-rate loan, refinancing with a different lender, or exploring fixed-rate options could help reduce repayments. For home loan rates, fees, and features, visit Mozo’s home loan comparison page and seek out the best deal to suit your financial circumstances.