RESERVE BANK PAUSES RATES
* The cash rate has risen from 0.1 per cent in April 2022 to 3.6 per cent in March.
* The Reserve Bank board decided at its April meeting to leave the cash rate on hold.
* In a statement, the board said the pause would “provide additional time to assess the impact of the increase in interest rates to date and the economic outlook”.
* The RBA believes inflation has peaked in Australia, with goods prices inflation expected to moderate in coming months.
* The forecast is for inflation to decline this year and next, to around three per cent in mid-2025.
* The board says there is evidence that the combination of higher interest rates, cost-of-living pressures and a decline in housing prices is leading to a “substantial slowing in household spending”.
* The labour market remains very tight with the jobless rate at a near 50-year low and wages growth is increasing in response.
WHAT’S NEXT?
* The board “expects that some further tightening of monetary policy may well be needed to ensure that inflation returns to target”, but this will depend on “developments in the global economy, trends in household spending and the outlook for inflation and the labour market”.
* Consumer groups have urged borrowers to shop around for better rates. The cumulative 3.5 per cent increase to the cash rate over the past 10 months added $1051 to monthly repayments on a $500,000 loan over 30 years, Canstar says.
* CPA Australia has urged businesses to seek professional advice, saying: “We are facing an unpredictable environment and businesses should not assume rate rises are over.”
* Master Builders Australia says governments should back in the rates pause and bring inflation under control by using their budgets to boost business productivity.
WHAT THE TREASURER SAYS
* “While today’s decision will come as a relief for a lot of Australians, we know people will continue to struggle. That’s why the costs of living are the primary focus of our economic plan and the upcoming budget.” – Treasurer Jim Chalmers.
Paul Osborne
(Australian Associated Press)
