For the last 18 months there’s been a quiet war among households as to who is the most disliked boss in the country, Qantas CEO Alan Joyce, or RBA Governor Philip Lowe. It would almost certainly depend whether you’re a frequent flyer or a mortgage holder. If you’re both, then it's probably a coin toss.

Ironically, Joyce stepped down the morning of RBA Governor Philip Lowe’s 78th and final RBA rate call, however it was the latter who left on somewhat of a high.

Lowe, who at the start of 2022 said he didn’t expect rates to rise until 2024 before hiking the cash rate 12 times in 13 months, held the official cash rate for the third consecutive month at the September meeting. The majority of experts and economists now believe the RBA has finished its rate hike cycle, following better than expected inflation figures. The official cash rate is 4.1 per cent.

We’ll try and unpack what the future holds for interest rates, what economists are saying, and what’s happening to house prices across the country.

What did Philip Lowe say at the September RBA announcement?

Lowe didn’t ruffle any more feathers at his final meeting despite having a hard and fast stance that “the Board remains resolute in its determination to return inflation to target and will do what is necessary to achieve that.”

There were a few key points to note in the statement which always accompanies a rate announcement. The statement was even more upbeat on inflation than in previous months.

“Inflation in Australia has passed its peak and the monthly indicator in July showed a further decline,” Lowe said.

We look for small changes to the statement each month. They might only be minor, but it gives us the best insight into the RBA’s thinking of the economy, at least before the full minutes of the meeting are released two weeks after the announcement.

Lowe said conditions in the labour market remain tight, a month after saying “very tight”, indicating they’re a little more relaxed on the labour market.

China and its economy has been a hot topic over the last few months. Why does the Chinese economy impact Australia? The exports and investment, particularly in the resources and tourism markets, helps drive Australia’s economy.

“…there is increased uncertainty around the outlook for the Chinese economy due to ongoing stresses in the property market,” Lowe noted.

Despite it being out of his hands when he passes over the reins to his current deputy Michele Bullock on September 17, Lowe still concluded by suggesting that “some further tightening of monetary policy may be required to ensure that inflation returns to target in a reasonable timeframe, but that will continue to depend upon the data and the evolving assessment of risks.”

Why did the RBA hold interest rates?

On August 30, the monthly inflation figures (Consumer Price Index, or CPI), were released, which showed a further easing after the more important quarterly decline influenced the August hold.

The monthly August update showed headline inflation for the 12 months to July dropped 4.9 per cent, down from 5.4 per cent in the year to June and 8.2 per cent over the 2022 calendar year.

There was also positive news in August tied to wages, which grew 0.8 per cent in June, softer than the market expectation of 0.9 per cent. Wage growth is intrinsically linked to interest rates, because wage growth tends to dictate how willing people are to spend on goods and services, which drives inflation. Higher wage growth, more money to spend.

August also revealed Australia’s labour market softened slightly the month prior, shedding 14,600 jobs in July. Economists had expected employment to rise. The unemployment rate also rose to 3.7 per cent, its highest level since May. The labour market is another tracked statistic intrinsically linked to interest rates. A more robust labour market, meaning people are employed, then they’re more likely to spend and drive inflation.

What are the banks saying about interest rates?

ANZ has affirmed its view the RBA is on “an extended pause.”

They do believe however, despite better than anticipated CPI figures, rate cuts aren’t on the horizon for a while.

“If the RBA adjusts policy in the near term, we think rate hikes are far more likely than cuts. Easing is a long way off,” the Shayne Elliott-led bank told its customers.

NAB believes there’s still another rate hike in November.

“We continue to see one final interest rate rise in November, although recent data and communication have increased the likelihood that interest rates have peaked – with the strength of services inflation in coming months critical.”

When will interest rates start to go down?

Westpac has reaffirmed its cut forecast to be from August next year.

“By the time of the August 5–6 meeting, the board will have a good idea of growth to the June quarter. However, it would need to wait until the 2023–24 September board meeting before the official growth rate for the June quarter will have printed.”

Evans says that it is unlikely a rate cut can come earlier, citing a tight labour market, potential delays in the beginning of the Fed’s easing cycle, and ongoing momentum in house prices.

“While still falling, inflation will be stickier in the first half of 2024 as the contraction in goods inflation eases and services inflation remains elevated. That combination is likely to preclude the prospect of rate cuts in the first half of 2024 despite the ongoing evidence that spending remains lacklustre.”

A cut in September would see the cash rate come down to 3.85 per cent. They then forecast another cut in 2024 to bring the cash rate to 3.6 per cent. There’s then a forecast for it to be at 3.35 per cent by March 2025.

NAB expects rates to start coming down in mid-2024. Between June and September 2024 they’re forecasting two rate cuts, to bring the cash rate to 3.85 per cent. By December 2024 they expect it to get to 3.35 per cent.

ANZ says the RBA has finished its hiking cycle, and will make the first cut in November 2024.

What is happening to house prices across the country?

The monthly Hedonic Home Value Index by property data analytics firm CoreLogic showed a sixth national rise in dwelling values.

South East Queensland has continued to outpace almost every major market across the country over the last few months. August showed Brisbane house values spiked 1.6 per cent, while those in the Sunshine Coast rose 1.2 per cent and Gold Coast one per cent. Gold Coast apartments also jumped one per cent, continuing their strong 2023 given the lack of supply.

Across Australia’s regional SA3 markets, areas of the Gold Coast and Sunshine Coast comprised seven of the top 10 markets for the largest capital gain over the three months ending August.

Coolangatta home values surged 6.2 per cent over the past three months, followed by the Sunshine Coast Hinterland, up 5.8 per cent, and Gold Coast North up 5.6 per cent.

CoreLogic’s Research Director Tim Lawless said strong internal migration into these areas is likely to be a key factor supporting housing demand and housing values in these areas.

For more information on the government's plan for South East Queensland over the next two decades, click here.