Cash Rate Decision March 2024: RBA Leaves Cash Rate Unchanged At 4.35%
labelCategory: RBA Cash Rate
Why Did The RBA Hold The Cash Rate In March 2024?
In its statement, the Reserve Bank’s board noted, “While recent data indicates that inflation is easing, it remains high. The Board expects that it will be some time yet before inflation is sustainably in the target range. The path of interest rates that will best ensure that inflation returns to target in a reasonable timeframe remains uncertain and the Board is not ruling anything in or out. The Board will rely upon the data and the evolving assessment of risks. The Board will continue to pay close attention to developments in the global economy, trends in domestic demand, and the outlook for inflation and the labour market. The Board remains resolute in its determination to return inflation to target.
“While there are encouraging signs that inflation is moderating, the economic outlook remains uncertain. The December quarter national accounts data confirmed growth has slowed. Household consumption growth remains particularly weak amid high inflation and the rise in interest rates. After recent declines, real incomes have stabilised and are expected to grow from here, which is expected to support growth in consumption later in the year.
“Meanwhile, growth in unit labour costs remains very high. It has begun to moderate slightly as measured productivity growth has picked up in the past two quarters but whether this trend will be sustained is uncertain.
“The central forecasts are for inflation to return to the target range of 2–3 per cent in 2025, and to the midpoint in 2026. Services price inflation is expected to decline gradually as demand moderates and growth in labour and non-labour costs eases. Employment is expected to continue to grow moderately, and the unemployment rate and the broader underutilisation rate are expected to increase a bit further.”
What Do Our Experts Say About The RBA’s Decision?
Alan Hemmings, CEO of Home Loan Experts, shared his insights on the RBA’s decision. “The hold by the RBA was expected. We are seeing lenders start to drop fixed rates, which is normally an indication of where rates are heading. I think the move to cut rates will be a timing thing.”
So, what does it mean for you?
Jonathan Preston, Senior Mortgage Broker explained, “The ongoing pause is good for the property market, bullish sentiment will continue, people are acclimating to higher rates now and don’t want to miss growth if the rates decline.”
Preston also noted that the ongoing rate pause would be a break for the increasing number of homeowners under mortgage stress or already in arrears.
How Does The Cash Rate Affect My Interest Rate?
Lenders add a margin to the official cash rate to determine the variable interest rate they offer to customers. So if you have a variable interest rate, it will almost certainly go up with a cash rate increase.
You can use our repayment calculator to find out what your new repayments should look like whenever the cash rate changes.
