The minutes from the 7 March meeting reveal the board will consider keeping the cash rate steady at 3.60% at the next meeting if the economy shows signs of softening.

Since May 2022, the RBA has rode an aggressive tightening cycle wave, lifting the cash rate from 0.10% to an 11-year high of 3.60%. 

On a $600,000 mortgage, the increases have lifted yearly repayments by more than $14,000 based on average interest rates.

While the cash rate is likely to be raised further in a bid to return inflation back to target (2-3%), currently running at an annualised 7.8%, the Board acknowledged a pause in the near future was imminent.

“Members agreed to reconsider the case for a pause at the following meeting, recognising that pausing would allow additional time to reassess the outlook for the economy,” the RBA minutes said.

“At what point it will be appropriate to pause will be determined by the data and the board’s assessment of the outlook.”

The RBA’s board meeting in March occurred before markets altered their expectations on future rate rises following the downfall of US-based Silicon Valley Bank and UBS’s takeover of Credit Suisse.

Upcoming releases on employment, inflation, retail trade, business conditions, and developments in the global economy will influence the RBA’s decision-making in April.

The unemployment rate returned to 3.5% in February, which was stronger than signalling the economy remains robust and surveyed business conditions remained strong.

Markets expect the central bank to keep rates on hold at its next meeting, while some economists forecast another 0.25% increase.

ANZ Senior Economist Felicity Emmett said her base case was for another 25 basis point hike next month, assuming financial market volatility recedes and monthly CPI data remains relatively high.

“The data the RBA has highlighted it’s watching has so far come in strongly,” Ms Emmett said.

“Next week’s February CPI will be important for the RBA’s deliberations, as will financial market developments. What the US Federal Reserve does later this week will also be an important consideration.

“While the risks of a pause have risen, on balance we continue to favour another 0.25% hike at the April meeting.”

On the other hand, Westpac Chief Economist Bill Evans argues a pause in April is supported in the March Minutes. 

“Westpac has been forecasting a pause at the April meeting – the strong emphasis on uncertainty in the March Minutes, the unusual commitment to consider a pause in April, and developments in market pricing and global financial markets all support that view,” Mr Evans said.

“However, the overriding challenge of returning inflation to the target will remain the dominant theme at the May meeting.

“We expect the Board will be confronted with a refreshed set of forecasts which will still highlight that inflation will not be at target until mid-2025, requiring a final 25 basis point increase.”

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