The board has decided to keep the cash rate at an all-time low of 0.1% – which is now valid for all of 2021 – and is now expected to be maintained at least until February 2022.
Hearing today’s decision, CreditorWatch chief economist Harley Dale said: “Maybe they have a Christmas tree in the corner of the room because the RBA hasn’t. rocked a lot of trees in its last stanza 2021. “
He called the latest move “in a predictable way.”
“The OCR has been there since November 2020, when the Bank cut the rate by 15 basis points, ”said Mr. Dale said.
Mr Dale noted that Australia’s economy is emerging from a long period of foreclosure, although restrictions continue to vary and shift.
From his point of view, “there is still uncertainty for households and businesses”.
While November may represent the first month Australia has been on substantial lockdowns, Mr Dale said at this point there is little data to reflect that, or Australia’s ability to recover.
The chief economist has warned that the economic recovery after COVID-19 “will not happen near a straight line.”
“A cover never does, but now more than ever” Sir Dale said.
He reflected that “the RBA might well consider the prospect of interests rates rising earlier than officially announced for so long now, but they seem happy to be playing Santa for now ”.
With so much talk about Australia’s economic recovery, the RBA’s decision-making and external market pressures – especially in the real estate arena – Mr Dale said that “the guesswork as to when the RBA will move will only intensify in 2022 “.
From his point of view, “that in itself is not useful for the confidence of households and, in particular, of companies”.
“In such a dynamic economic environment, early February 2022 is a long way off”, Sir Dale added.
“The first RBA board meeting next year will be held with much more information regarding the economic environment after June – October of this year. This declaration at the very beginning of February could make languages tremble. “
Mr Dale’s comments come after recent statements by Dr Andrew Wilson that there will be a sharp hike in interest rates over the next 12 to 24 months.
The Bluestone Home Loans consultant economist was reacting to the Commonwealth Bank’s forecast of a 10 percent drop in house prices when he made the comments.
While acknowledging that the market will weaken in 2022 – due to rising accessibility barriers and declining demand – Dr Wilson reiterated that the RBA itself had described expectations that the rate cash flow is expected to remain at current levels until 2024, based on the central bank’s salary increase demands. and inflation targeting.
“For wage growth to meet the RBA’s demands for a rate hike by November 2022 – the date predicted by those predicting record price cuts in 2023 – would require an unprecedented increase in income over the years. next months, “he said.