RBA-Final cash rate call for this financial year

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It is not intended to be relied upon as, nor is it a substitute for specific professional advice.

The Reserve Bank of Australia has made its last call on the official cash rate for this financial year.

As widely predicted, the RBA has held the cash rate at a record-low 0.1 of a percentage point, despite the housing market continues to boom.
RBA decided to maintain the current policy settings, including the targets of 10 basis points for the cash rate and the yield on the 3-year Australian Government bond; the parameters of the government bond purchase program; and the rate of zero percent on Exchange Settlement balances.

Meanwhile, the RBA issue a clear warning to investors noting that as borrowing increases, and given the environment of rising housing prices and low-interest rates, the bank will be monitoring trends in housing borrowing carefully to ensure lending standards are maintained. The RBA repeats its intentions to keep rates as they are until 2024 at the earliest.
Creditor Watch chief economist Harley Dale supported the RBA’s decisions. He agreed that the low interest rate has a positive effect on economic recovery. It can stimulate business investment and ensure our economic recovery remains durable.

AMP Capital’s Shane Oliver commented, “The jobs market is still a long way from full employment, wages growth at 1.5 percent is way below the 3 percent-plus paces necessary to sustain 2–3 percent inflation, and in any case, inflation is still well below its target zone. So, a rate hike remains some time off”.

However, some are still certain the RBA will be pushed to move in 2023. With the tightening monetary policy in the new financial year, the interest rates are almost certain to be up. However, the RBA states that they prefer to wait for other central banks (e.g. NZ and Canada) to move first before they take any action on the interest rate. Some of the big four are planning to take action on their loan policy and interest rate to slow the speed of property price growth. They will watch the housing market closing.

Nevertheless, the government is still putting in great effort to stimulate the economy. Investors can take advantage of the low interest rate and establish their investment plan. If you are considering buying a business or investing in the property market, you can always give us a call and learn your legal risks and obligations.