The Reserve Bank of Australia (RBA) has raised interest rates at each of its 10 last Board meetings. But there was mention of a pause in the Monetary Policy Statement issued with the March cash rate decision. With the release of the minutes of the RBA Board March meeting, it has now been revealed that a pause in interest rates will be discussed at the 4 April meeting.
The announcement statement is brief and while providing a certain amount of information, referring to the minutes can be far more enlightening. For motor vehicle buyers planning to take on finance, obtaining the type of information available in the RBA meeting minutes may give indications for interest rates.
For business owners, the discussions by the Board regarding the global and Australian economy, productivity and the labour market may also assist with business planning. Jade provides a summary of the key points in the RBA March meeting minutes with a particular focus on the monetary policy (interest rates) discussions. We have specifically highlighted discussions that were not covered in the Monetary Statement and/or were elaborated on.
RBA March Meeting Minutes – Key Points
The minutes are quite a lengthy document and cover a large selection of economic issues. The terminology used can be difficult to interpret. We have extracted a number of the key points about interest rates.
- Headline inflation at an international level has peaked while services inflation was still high in some countries.
- Unemployment increased in January but the Board noted that it was difficult to assess the underlying labour conditions due to seasonal trends. February figures are expected to provide a better indication of whether or not the January trend was a turning point or a seasonal effect.
- Concerns discussed over the productivity growth – no increase in net terms over the previous 3 years. No offset realised to rising costs of labour.
- Concerns that issues with productivity could cause inflation to remain at high levels.
- Easing of inflation is expected for the March quarter based on January CPI figures. But the month-to-month figures could be volatile.
- The expectations of the financial markets for the cash rate had changed – an increase in peak as a result of the RBA February decision.
- All of the most significant data that had been released over the previous month – GDP, labour, inflation and wages, was softer than had been expected. The extent that this may be a signal that demand was weaker than had been assumed was discussed. However, there were considerations to suggest not too much emphasis should be placed on the data from one period.
- With inflation still too high and with the forecast for it to stay above the 2-3% target for 2 years, the Board agreed that further tightening in monetary policy, i.e. rate rise, was warranted.
- When considering the interest rates outlook, the Board observed that more rate rises would likely be needed.
- Assessing several issues including inflation forecasts, slow productivity and other indicators it was noted that rates were in restrictive territory with the outlook for the economy uncertain.
- These considerations (above) meant that there would be a point where it was appropriate to keep the cash rate on hold, and steady.
- The lag between tighter monetary policy taking effect was discussed and it was noted that this effect complicated the process of assessing the economic outlook.
- The Board agreed that the upcoming data releases for inflation, employment, business surveys and retail trade would provide significant extra information.
- It was agreed to discuss the case for pausing interest rates at the next meeting.
That next meeting is on Tuesday 4 April. Those interested in reading the complete transcript of the meeting can access the document at the RBA website.
Motor Vehicle Finance Interest Rates - Considerations
It is worth noting that since the March RBA meeting, the banking issues both in the US and with Credit Suisse in Europe have emerged and the latest unemployment figures were released. The minutes indicate the Board sees conflicting signs regarding the economy and the issues that are keeping Australia's inflation rate high. Car loan refinance options could be impacted by these factors. Productivity growth also remains of great concern and if this trend continues so could high inflation. Discover various business car loan refinancing options here
The messaging around rate rises and the forecasts from the financial markets – being the major banks etc, appear to suggest that there could be a pause in April. But that more interest rate rises are also on the horizon. Should the Board decide to keep rates steady in April, that may not mean a complete halt to rises.
But it would give buyers more time to secure Business Car Finance Interest Rates as the Board’s meeting after 4 April will be in early May. Buyers should be aware of Easter and Anzac Day holidays in April. Events that may cause delays for their purchase plans.
If there is a pause in interest rates in April, it may give buyers of used cars more time to secure financing at current rates. Additionally, for business buyers, a pause could provide an opportunity to take advantage of the temporary full expensing by securing a Used Car Loan before the scheme expires at the end of June. It's important to note that any delays caused by holidays, such as Easter and Anzac Day in April, should be considered when making purchase plans.
Speak with us about pre-approved vehicle finance at our current low rates to expedite your purchase process.
For cheaper interest rates on personal and business vehicle finance, contact Jade Car Loans at 1300 000 003.
DISCLAIMER: IN REGARD TO MISREPRESENTATIONS AND ERRORS CONTAINED IN THE MATERIAL AS PRESENTED, LIABILITY IS NOT ACCEPTED. THE DETAILS AND CONTENT IS PROVIDED FOR CAR BUYERS AND INDIVIDUALS AND BUSINESS SEEKING FINANCE PURELY AS GENERAL INFORMATION. THIS IS NOT PROVIDED AS THE ONLY SOURCE OF FINANCIAL INFORMATION. ANYONE THAT CONSIDERS THAT NEED FINANCIAL ADVICE ABOUT THEIR SPECIFIC REQUIREMENTS SHOULD SEEK THEIR FINANCIAL ADVISOR.