Invest
RBA makes latest cash rate call
The Reserve Bank of Australia has made its latest call on the official cash rate.
RBA makes latest cash rate call
The Reserve Bank of Australia has made its latest call on the official cash rate.
With lockdowns still in place in Australia’s most populous cities, the RBA has decided to hold the official cash rate at a record low of 0.1 of a percentage point for the 10th consecutive month.
As a result of Sydney’s longest lockdown on record and Victoria’s considerable lift in COVID cases, the RBA’s stated conditions for a rate hike are far from being met.
According to chief economist at CreditorWatch Harley Dale, it’s now clear that the RBA will stick to its intention to retain strong support for households and businesses.
“Predictably, there is no plan to increase the official cash rate until 2024 and policies are being maintained to assist in keeping downward pressure on borrowing costs,” Mr Dale said.
“This environment will be very beneficial for businesses and households as they look towards the hopeful easing of lockdown restrictions in late October/early November.
“The highly stimulatory monetary policy climate will also be crucial in moving through the inevitable bumpiness and uncertainty of a post-lockdown economy.”
However, what could possibly alter the RBA’s course of action is the threat of rising inflation.
Commenting on Tuesday’s decision, Griffith University’s Tony Makin opined that if inflation numbers continue to exceed expectations, the RBA could be forced to raise official rates earlier than planned.
“Given the COVID lockdowns here are having a bigger macroeconomic impact here than abroad, the RBA may, however, be slower to act,” Mr Makin said.
Similarly, Monash University’s Mark Crosby said “rising inflation will likely see them [rates] move sooner than markets currently anticipate”.
Another key change since the RBA’s last meeting has been a clear policy move towards the reintroduction of lending restrictions for residential property, which the RBA plays an integral role in.
Last month, Treasurer Josh Frydenberg strongly indicated that a crackdown on high-debt home loans was imminent following discussions with the Council of Financial Regulators, including the RBA and the Australian Prudential Regulation Authority (APRA).
APRA confirmed in a statement that it plans to release “an information paper on its framework for implementing macroprudential policy” in the coming months and that it would continue to consult with the Council of Financial Regulators on the potential implementation of any measures.
Responding to these developments, Mr Dale said the lending dynamic will be a key area to watch in approaching months.
“The RBA has been noting upward pressure on property prices and housing affordability for a considerable time and will now be upping the ante,” Mr Dale said on Tuesday.
He opined that for a number of reasons, the RBA clearly faces a challenging few months.
“Due to the combination of easing lockdown restrictions and tighter lending conditions, the RBA faces a different dynamic in coming months than has been seen over 2021 to date,” Mr Dale concluded.
RELATED ARTICLES
-
Australia’s spending surprise raises the odds of a February rate move — here’s how to protect margin and momentum
-
Australia’s inflation cools to 3.4% — why the RBA’s next move still isn’t a lay‑up for business
-
Inflation cools to 3.4% — but the RBA’s reaction function keeps businesses on a knife-edge
About the author
About the author
Economy
Australia’s spending surprise raises the odds of a February rate move — here’s how to protect margin and momentum
Household outlays are running hotter than economists expected, with the latest ABS readings showing broad-based gains across services and goods. That resilience is exactly the kind of demand impulse ...Read more
Economy
Australia’s inflation cools to 3.4% — why the RBA’s next move still isn’t a lay‑up for business
Headline inflation easing is good optics; balance sheets feel something different. With year‑on‑year CPI down to 3.4% in November from 3.8%, hopes for rate relief are rising — but policymakers remain ...Read more
Economy
Inflation cools to 3.4% — but the RBA’s reaction function keeps businesses on a knife-edge
Australia’s headline CPI edged down to 3.4% year-on-year in November, from 3.8%, easing immediate pressure but not eliminating the risk of further tightening. With services inflation sticky and ...Read more
Economy
Higher-for-longer, not higher forever: How Australia’s inflation ‘surprise’ is rewriting CFO playbooks for 2026
Australia’s latest inflation pulse eased but didn’t budge bank outlooks: near‑term rate cuts are still a long shot, with some houses flagging upside risk. That steadier‑for‑longer cash rate is pushing ...Read more
Economy
Australia's inflation illusion: the real challenge lies in pricing power and productivity
Headline inflation has cooled to 3.4% year-on-year, but the Reserve Bank’s caution—and a still‑hot housing backdrop—mean the rate threat hasn’t left the room. For boards, the next few quarters are ...Read more
Economy
When house prices lift, tills ring: A case study in turning Australia’s wealth effect into growth
Australia’s latest upswing in household wealth, anchored by higher dwelling values, is more than a feel‑good statistic—it is a profit and planning signal. The ABS notes property’s centrality to ...Read 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
Australia’s spending surprise raises the odds of a February rate move — here’s how to protect margin and momentum
Household outlays are running hotter than economists expected, with the latest ABS readings showing broad-based gains across services and goods. That resilience is exactly the kind of demand impulse ...Read more
Economy
Australia’s inflation cools to 3.4% — why the RBA’s next move still isn’t a lay‑up for business
Headline inflation easing is good optics; balance sheets feel something different. With year‑on‑year CPI down to 3.4% in November from 3.8%, hopes for rate relief are rising — but policymakers remain ...Read more
Economy
Inflation cools to 3.4% — but the RBA’s reaction function keeps businesses on a knife-edge
Australia’s headline CPI edged down to 3.4% year-on-year in November, from 3.8%, easing immediate pressure but not eliminating the risk of further tightening. With services inflation sticky and ...Read more
Economy
Higher-for-longer, not higher forever: How Australia’s inflation ‘surprise’ is rewriting CFO playbooks for 2026
Australia’s latest inflation pulse eased but didn’t budge bank outlooks: near‑term rate cuts are still a long shot, with some houses flagging upside risk. That steadier‑for‑longer cash rate is pushing ...Read more
Economy
Australia's inflation illusion: the real challenge lies in pricing power and productivity
Headline inflation has cooled to 3.4% year-on-year, but the Reserve Bank’s caution—and a still‑hot housing backdrop—mean the rate threat hasn’t left the room. For boards, the next few quarters are ...Read more
Economy
When house prices lift, tills ring: A case study in turning Australia’s wealth effect into growth
Australia’s latest upswing in household wealth, anchored by higher dwelling values, is more than a feel‑good statistic—it is a profit and planning signal. The ABS notes property’s centrality to ...Read 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
