Invest
RBA makes cash rate call for August
The Reserve Bank of Australia has made its latest call on the official cash rate.
RBA makes cash rate call for August
The Reserve Bank of Australia has made its latest call on the official cash rate.
Recent localised lockdowns have cooled chatter of an impending rate hike, with the central bank announcing on Tuesday it has held the cash rate at a record-low 0.1 of a percentage point for another month.
For months, speculation has been running wild about interest rates rising before the RBA’s long-term ‘deadline’ of 2024, but with Greater Sydney under strict stay-at-home orders and several other capitals in and out of short circuit-breaker lockdowns, chatter appears to have been premature.
“It comes as no surprise that the board of the Reserve Bank of Australia today announced the holding of the official cash rate (OCR) at its record low of 0.10 per cent,” Harley Dale, chief economist at CreditorWatch, said.
Mr Dale noted that while the RBA “clearly” stands ready to maintain its stimulus support for the Australian economy, “they’ve effectively done all they can”.
“The dynamic of the Australian economy has changed substantially in the past month, and the ball is now in the court of the federal government,” Mr Dale said.
Sydney’s prolonged lockdown has sparked fears of another recession. In fact, several economists don’t have any doubt that Australia will record a GDP contraction in September, with NAB’s Gareth Spence putting the drop at between 2 and 2.5 per cent.
“The biggest hit to the economy will come through household consumption, mostly with services, although goods might also fall as well given the extent of lockdowns,” he said.
Should the lockdown stretch into early September, Mr Spence is confident the country could succumb to back-to-back negative quarters.
As such, economists have slightly changed their tune, with many now conceding that the RBA is a long way from meeting its conditions for a rate hike as lockdowns halt progress.
“The latest coronavirus outbreaks and lockdowns risk delaying progress towards its goals,” Shane Oliver, AMP Capital, said.
Similarly, Mark Brimble, Griffith University, said that “there is still a long way to go with COVID to get to a firmer future state and thus persistent inflation to start to come through”.
In June, both Westpac and Commonwealth bank detailed rate hike predictions, with the latter foreseeing a rate lift as soon as November 2022.
But as the lockdowns set in, CBA moved quickly to issue a revised economic forecast, predicting a 2.7 per cent slump in activity in the September quarter.
“A deep contraction in GDP over Q3 21 is now a fait accompli,” Commonwealth Bank’s head of Australian economics, Gareth Aird, said. And although he did not address the bank’s earlier cash rate predictions, CBA’s gloomy forecast doesn’t relay optimism.
RELATED ARTICLES
About the author
About the author
Economy
RBA's hawkish stance reflects inflation concerns, State Street economist comments
In a recent statement, the Reserve Bank of Australia (RBA) has signaled a hawkish stance on interest rates, drawing insights from financial experts about the implications for Australia's economic ...Read more
Economy
Navigating the inflation maze: How CFOs can outsmart economic hurdles in Australia
Fresh inflation data have cooled expectations of near-term rate cuts in Australia, intensifying pressure on margins, capital allocation and demand. Rather than wait for monetary relief that may not ...Read more
Economy
Inflation concerns rise as Australia's CPI climbs to 3.8% in October
Australia's latest Consumer Price Index (CPI) figures have sent ripples through the economy, with headline inflation accelerating to 3.8% year-on-year in October, up from 3.6% in September. The data, ...Read more
Economy
October CPI results pose challenges for RBA’s monetary policy stance
In a surprising turn of events, the October Consumer Price Index (CPI) data has raised eyebrows among economists and market strategists, revealing stronger-than-expected inflationary pressures in ...Read more
Economy
Global deal activity declines by 6% amid economic uncertainty, reports GlobalData
In a year characterised by economic turbulence and evolving market conditions, global deal activity has witnessed a notable downturn during the first ten months of 2025. According to GlobalData, a ...Read more
Economy
Australia’s softening labour market puts another RBA cut in play — here’s what business should do now
A four-year high in unemployment has revived expectations the Reserve Bank could deliver another rate cut as soon as November. With quarterly GDP growth running at 0.6 per cent and annual growth at ...Read more
Economy
Rising CPI reinforces RBA’s stance as rate cut expectations remain: State Street
State Street Global Advisors says the Reserve Bank of Australia (RBA) is likely to hold its current policy outlook following the release of September quarter inflation data, which showed an unexpected ...Read more
Economy
NSW SES boosts tsunami preparedness ahead of World Tsunami Awareness Day
As World Tsunami Awareness Day approaches on 5 November, the New South Wales State Emergency Service (NSW SES) is ramping up efforts to enhance tsunami preparedness along the east coastRead more
Economy
RBA's hawkish stance reflects inflation concerns, State Street economist comments
In a recent statement, the Reserve Bank of Australia (RBA) has signaled a hawkish stance on interest rates, drawing insights from financial experts about the implications for Australia's economic ...Read more
Economy
Navigating the inflation maze: How CFOs can outsmart economic hurdles in Australia
Fresh inflation data have cooled expectations of near-term rate cuts in Australia, intensifying pressure on margins, capital allocation and demand. Rather than wait for monetary relief that may not ...Read more
Economy
Inflation concerns rise as Australia's CPI climbs to 3.8% in October
Australia's latest Consumer Price Index (CPI) figures have sent ripples through the economy, with headline inflation accelerating to 3.8% year-on-year in October, up from 3.6% in September. The data, ...Read more
Economy
October CPI results pose challenges for RBA’s monetary policy stance
In a surprising turn of events, the October Consumer Price Index (CPI) data has raised eyebrows among economists and market strategists, revealing stronger-than-expected inflationary pressures in ...Read more
Economy
Global deal activity declines by 6% amid economic uncertainty, reports GlobalData
In a year characterised by economic turbulence and evolving market conditions, global deal activity has witnessed a notable downturn during the first ten months of 2025. According to GlobalData, a ...Read more
Economy
Australia’s softening labour market puts another RBA cut in play — here’s what business should do now
A four-year high in unemployment has revived expectations the Reserve Bank could deliver another rate cut as soon as November. With quarterly GDP growth running at 0.6 per cent and annual growth at ...Read more
Economy
Rising CPI reinforces RBA’s stance as rate cut expectations remain: State Street
State Street Global Advisors says the Reserve Bank of Australia (RBA) is likely to hold its current policy outlook following the release of September quarter inflation data, which showed an unexpected ...Read more
Economy
NSW SES boosts tsunami preparedness ahead of World Tsunami Awareness Day
As World Tsunami Awareness Day approaches on 5 November, the New South Wales State Emergency Service (NSW SES) is ramping up efforts to enhance tsunami preparedness along the east coastRead more
