RBA appeals April cash rate

The Reserve Bank of Australia (RBA) held the official exchange rate steady at 0.1 percentage point following its monthly board meeting on Tuesday, April 5.

It’s a move that was widely expected, though industry watchers predict the days of the record high rate are numbered.

PropTrack economist Paul Ryan said today’s rate call indicated the bank was still patient in assessing inflation persistence and was likely hoping to wait for the release of inflation data. inflation and wage growth later in the year before making any changes.

But he noted that changing circumstances could push the RBA to act sooner rather than later.

“The RBA cannot look through temporary inflation forever, so there remains the possibility that high supply shock-induced inflation will force the RBA’s hand. The RBA will be watching carefully as expectations of inflation across the economy are not driven up by the rising cost of living,” Ryan said.

He observed that property buyers had already started pricing in interest rate hikes.

“Higher inflation increases the likelihood of higher interest rates later in the year. This will weigh on house price growth, which has clearly slowed in anticipation of these higher borrowing costs. The outlook for house prices later in the year is one of a balance between rising mortgage rates and the higher income growth the RBA is looking to see before raising rates,” he said. added.

Anneke Thompson, chief economist at CreditorWatch, agreed that “an interest rate hike appears imminent” while noting that the RBA should take a cautious approach to any changes.

“While inflation is a key objective for the RBA, full employment is another. Having just reached full employment, or close to full employment, it is highly unlikely that the RBA would choose to threaten that status by increasing the cash rate too quickly. A stable approach is a more likely scenario, with small increases spaced out as the RBA monitors the impact of each rate hike as it occurs,” he said. she declared.

RBA appeals April cash rate

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Last update: April 05, 2022

Posted: April 05, 2022