There will be no early Christmas present for Australian borrowers from the Reserve Bank, with interest rates again staying on hold.

The bank’s latest decision, announced on Tuesday afternoon, means the country’s official cash rate has stuck at 4.35 per cent for more than a year.

Other central banks around the world are already easing borrowing costs but the RBA maintains Australia’s rates did not rise as high as elsewhere and the jobs market has proven unusually strong.

“Inflation has fallen substantially since the peak in 2022, as higher interest rates have been working to bring aggregate demand and supply closer towards balance. Measures of underlying inflation are around 3.5 per cent, which is still some way from the 2.5 per cent midpoint of the inflation target,” the bank said in its post-meeting statement.

“The most recent forecasts published in the November Statement on Monetary Policy do not see inflation returning sustainably to the midpoint of the target until 2026. The board is gaining some confidence that inflationary pressures are declining in line with these recent forecasts, but risks remain.”

At its meeting today, the Board decided to leave the cash rate target unchanged at 4.35 per cent and the interest rate paid on Exchange Settlement balances unchanged at 4.25 per cent. Read more: https://t.co/uGrMriYHAa pic.twitter.com/JXlcARzvmp

— Reserve Bank of Australia (@RBAInfo) December 10, 2024

Tuesday’s decision came as financial comparison website RateCity said borrowers who hadn’t refinanced their home loans in the past year had paid almost $6000 extra in interest.

It found the average borrower with a $500,000 loan a year ago would have paid an estimated $35,308 interest on their home loan in 12 months between December 2023 and November 2024. This assumes the borrower has not renegotiated their rate in that time.

However, if they had refinanced one year ago, their annual interest bill would have been $29,708 – a saving of $5600.

“Plenty of borrowers would have liked a little treat in the form of a rate cut for Christmas, but they’ll need to gift it to themselves,” RateCity.com.au money editor Laine Gordon said.

“Spend some time this summer getting your finances in order, because one of the most effective ways to inject some ongoing relief into your budget is to refinance to a lower-rate lender.

“Even if you didn’t get around to switching last year, all is not lost. Refinancing now could still save you almost $10,000 in interest over the next two years if you switch to a rate under 6 per cent. For borrowers with bigger loans in Sydney and Melbourne those savings could be closer to $20,000.”

Source: RateCity

Meanwhile, a Reuters survey of 44 economists last week found most do not expect a cut in Australia’s official interest rates until the June quarter of 2025. That is a shift from November, when the first three months of the year were the more popular pick.

Economists highlight strength in the labour market and the RBA’s assertive posture on underlying price pressures as reasons to believe the wait for cuts will be a bit longer.

While the annual headline inflation rate is 2.8 per cent – back within the target band – the RBA remains focused on underlying price measures, which have been slower to moderate.

Importantly, underlying measures reduce the effect of irregular or temporary price changes, such as petrol and government energy bill rebates.

Last week’s national accounts showcased the slowest rate of annual growth in GDP in more than three decades, outside the pandemic, in a sign of an economy under stress.

Ahead of Tuesday’s announcement, HSBC chief economist for Australia, New Zealand and global commodities Paul Bloxham was unconvinced the softer-than-expected growth report would make the central bank more dovish.

“Although the September quarter GDP figures showed weaker than expected growth in demand, they also showed weaker than expected productivity growth, and hence a weaker supply side of the economy,” Bloxham wrote in a note.

“While weaker demand would normally be thought of as meaning lower inflationary pressures, this is not necessarily the case when supply is weaker too.”

Interest rate cuts were “still some time away”, Bloxham said.

He expects little change in language in the RBA’s post-meeting statement and press conference on Tuesday, given complex domestic and international conditions. The looming second Trump presidency in the US remains a key source of uncertainty.

Australian Council Of Trade Unions secretary Sally McManus called for interest rates to be lowered at the December meeting.

“Working people are under so much pressure that household spending actually went backwards last quarter,” McManus said.

“Normally when that happens, the alarm bells sound in the central bank and it urgently cuts interest rates.”

She said the RBA’s fear of wages pushing up inflation was unfounded and the true cause of unsustainable price growth was supply chain issues and price gouging.

-with AAP