The early Easter ‘treat’ delivered by the RBA comes despite major bank economists at odds over whether the Reserve Bank would increase for the 11th consecutive month or pause in April.
PropTrack Senior Economist Eleanor Creagh detailed the Reserve Bank is currently operating under the ‘policy of least regret’ and given that the full effect of the higher interest rates is yet to be felt, the RBA has paused to allow more time to assess how economic conditions unfold.
“With consumer spending set to slow further and economic activity set to weaken in the coming months, the Board decided it was appropriate to keep the cash rate on hold, giving them time to assess the impact of rate rises already delivered on households, businesses, and economic conditions,” Ms Creagh said.
“However, the Board has left headroom to further increase the cash rate next month if conditions deem necessary.”
The April pause follows the RBA indicating within its March minutes that the Board would consider holding the cash rate, recognising that pausing would allow additional time to reassess the outlook for the economy.
In his post meeting statement, RBA Governor Dr Philip Lowe said a range of information, including the monthly CPI indicator, suggests that inflation has peaked in Australia.
"Growth in the Australian economy has slowed, with growth over the next couple of years expected to be below trend," Dr Lowe said.
"There is further 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 decision to hold interest rates steady this month provides the Board with more time to assess the state of the economy and the outlook, in an environment of considerable uncertainty."
WLTH CEO Brodie Haupt said for borrowers, this move serves as an opportunity to reassess their financial situation and potentially explore refinancing options.
"The RBA's decision can be seen as a mixed development with both positive and negative implications for the broader economy and households," Mr Haupt said.
"This perceived relief may drive confidence and potentially lead to an increase in consumer spending, which would work against the board’s actions to curb inflation.
"Borrowers should be mindful that the RBA has not ruled out further tightening of the cash rate and that the impact of these hikes has not fully materialised."
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