Invest
RBA makes March cash rate call
The RBA has announced its second rate decision for 2022.
RBA makes March cash rate call
In the second interest rate decision from the Reserve Bank of Australia (RBA) for 2022, the board decided to hold the official cash rate at a record low 0.1 per cent – a rate that has remained unchanged since November 2020.
The bank’s latest call was largely anticipated against the backdrop of some key uncertainties.
Noting a change in dynamics since the start of 2022, when conjecture about interest rate rises was considerably rampant, Haly Dale, chief economist at CreditorWatch, cited several key developments that influenced the board’s decision on Tuesday.
"The Ukrainian crisis provides substantial geo-political uncertainty. Damaging economic and humanitarian consequences have yet to play out and discussion of petrol prices here in Australia hitting $2 a litre won’t be lost on consumers.
“Consumer confidence has already been trending down for nearly twelve months and supply chain issues associated with the crisis is likely to lead to a higher demand in groceries, sparked interest rates and steeper mortgage repayments,” said Mr Dale.
An added unknown is the pace at which the business and household sectors will bounce back now that COVID restrictions have largely been removed.
"Many are out and about, but many also remain reticent to engage in public life in a manner consistent with the world’s ‘new normal’, whatever that may be. The situation will settle down, but in the interim, it presents a challenge for bricks and mortar SMEs,” Mr Dale noted.
The federal election, now almost certain to be held in May, is also expected to weigh on the governor's mind.
"The short of it is that the RBA is still in sit-and-wait mode,” Mr Dale said.
“The situation between Russia and the Ukraine likely throws some delay into interest rate expectations here, although we do have a highly anticipated Federal Reserve rate decision in the United States later this month. “
AMP’s Shane Oliver expects the RBA’s conditions for raising rates to be in place by the September quarter.
“Our base case is for the first hike to be in August but there is a very high risk it will come in June if wages growth picks up as we expect, underlying inflation continues to surprise on the upside and unemployment continues to fall,” Mr Oliver said.
Similarly, Bendigo Bank’s David Robertson believes August is the month to watch.
“The RBA is very close to starting their tightening cycle and exiting pandemic monetary policy settings, but will probably wait for two more sets of inflation data (in April and July) before hiking rates in August,” said Mr Robertson.
"A series of cash rate hikes up to around 1.5 per cent by mid-2023 should then follow."
RELATED ARTICLES
About the author
About the author
Economy
RBA's interest rate hike impacts Australian employment landscape
The Reserve Bank of Australia (RBA) has decided to increase interest rates by 25 basis points, raising the cash rate to 3.85%. This move, aimed at controlling inflation, has elicited responses from ...Read more
Economy
RBA’s latest rate hike sparks debate over economic impact
In a surprising move, the Reserve Bank of Australia (RBA) has increased the cash rate, signalling a significant shift in its monetary policy approach. This decision comes amid a backdrop of unexpected ...Read more
Economy
When inflation reopens the rate door: A broker-sector case study in defending margins, clients and share
Australia’s latest trimmed-mean inflation reading at 3.3% has revived the prospect of another Reserve Bank move and put lenders, brokers and borrowers back on a tightening footing. This case study ...Read more
Economy
Inflation rise dampens hopes for interest rate cuts as employment dynamics shift
In a development that has dashed hopes for an interest rate cut, Australia's Consumer Price Index (CPI) has surged back to 3.8%, erasing the progress made since October. This unexpected rise in ...Read more
Economy
Inflation surge poses challenges for small businesses and consumers
The latest inflation figures have sparked concern among Australian businesses and consumers alike, with the rising costs expected to influence the Reserve Bank of Australia's (RBA) upcoming interest ...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
RBA's interest rate hike impacts Australian employment landscape
The Reserve Bank of Australia (RBA) has decided to increase interest rates by 25 basis points, raising the cash rate to 3.85%. This move, aimed at controlling inflation, has elicited responses from ...Read more
Economy
RBA’s latest rate hike sparks debate over economic impact
In a surprising move, the Reserve Bank of Australia (RBA) has increased the cash rate, signalling a significant shift in its monetary policy approach. This decision comes amid a backdrop of unexpected ...Read more
Economy
When inflation reopens the rate door: A broker-sector case study in defending margins, clients and share
Australia’s latest trimmed-mean inflation reading at 3.3% has revived the prospect of another Reserve Bank move and put lenders, brokers and borrowers back on a tightening footing. This case study ...Read more
Economy
Inflation rise dampens hopes for interest rate cuts as employment dynamics shift
In a development that has dashed hopes for an interest rate cut, Australia's Consumer Price Index (CPI) has surged back to 3.8%, erasing the progress made since October. This unexpected rise in ...Read more
Economy
Inflation surge poses challenges for small businesses and consumers
The latest inflation figures have sparked concern among Australian businesses and consumers alike, with the rising costs expected to influence the Reserve Bank of Australia's (RBA) upcoming interest ...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
