Saturday, August 13, 2022
Latest News

Australia’s interest rates remain on hold at 0.10 per cent

interest rates

The RBA today decided to hold the cash rate at its current level, which was last changed in November 2020

Australia’s interest rates remain on hold at the historic low level of 0.10 per cent despite soaring inflation figures and the rising cost of living.

The Reserve Bank of Australia (RBA) today decided to hold the cash rate at its current level, which was last changed in November 2020.

A week ago shock inflation data from the Australian Bureau of Statistics prompted many economists – including those at all four of the big banks – to bring forward their forecasts for an interest rate hike to as early as August 2022.

In his monetary statement RBA Governor Dr Philip Lowe addressed the larger than expected inflation data, saying the central bank was keeping a keen eye on headline figures.

Inflation has picked up more quickly than the RBA had expected, but remains lower than in many other countries. The headline CPI inflation rate is 3.5 per cent and is being affected by higher petrol prices, higher prices for newly constructed homes and the disruptions to global supply chains. In underlying terms, inflation is 2.6 per cent, Dr Lowe said.

As the Board has stated previously, it will not increase the cash rate until actual inflation is sustainably within the 2 to 3 per cent target range. While inflation has picked up, it is too early to conclude that it is sustainably within the target band, he said.

If interest rates were to be hiked multiple times in 2022, the maximum borrowing capacity of Australians would be slashed by tens of thousands of dollars.

Research Director at RateCity.com.au Sally Tindall said borrowers should expect interest rate hikes to come – with or without an official decision from the RBA.

The RBA wants to see stronger wages growth before it asks mortgage holders to pay more. However, higher than expected inflation figures, falling unemployment and a push from other central banks to hike rates could force its hand earlier than expected, she said.

Important:

The articles are for information purposes only and Invest for Property shall not be held responsible for any errors, omissions or inaccuracies within it. Any rules or regulations mentioned within the website are those relevant at the time of publication and may not be the most up-to-date.

Invest for Property does not endorse any of the products or services that appear on it or are linked to it and are not liable for any action that you may take as a result of the content of this website, or losses or damage you may incur doing so.

There is no obligation to purchase anything but, if you decide to do so, you are strongly advised to consult a professional adviser before making any investment decisions.

Please remember that investments of any type may rise or fall and past performance does not guarantee future performance in respect of income or capital growth; you may not get back the amount you invested.

Leave a Reply