In the lead-up to the March meeting of the Board of the Reserve Bank of Australia (RBA) there was a lot of talk and media coverage on the timing for a rate increase. This started to emerge during 2021 with housing prices surging due to the low interest rate environment and increased as the months went on and inflation started to rise. The RBA interest rates decision is made at the monthly Board meetings.
While the reality was that it was probably unlikely that the RBA would increase rates at its March meeting, the environment at that time was without doubt interesting, concerning and unprecedented. Global concern around the situation in Ukraine situation is affecting the financial markets and both NSW and Queensland were suffering an unprecedented flood crisis.
Amidst these scenarios, the RBA Board met on 1 March and made the decision to keep the cash rate on hold at 0.1%. This has been the rate since November 2020 and has been key to cheaper lender rates across most markets including marine finance and boat loans.
But as always, the reasoning around these decisions and to get an insight into the Board’s thinking and rationale moving forward, the statement released with the announcement is worth reading.
In the March statement, the RBA makes mention of the Ukraine situation emerging as a new source of uncertainty. It also reiterates its position of remaining patient in order for its unemployment and inflation targets to be achieved before moving on rates. The RBA says that it will retain supportive monetary policy.
Philip Lowe, Governor of the RBA said that recovery from the pandemic globally was continuing. He said that increased energy prices and supply chain disruptions had resulted in inflation rising sharply in some counties.
The resilient nature of the economy in Australia was highlighted as the country emerged from the initial Omicron crisis with an increase in consumer spending and business investment. The unemployment figures, Dr Lowe said, were evident of the pick-up being at the lowest rate in 14 years, 4.2%.
The Board acknowledged inflation had risen at a faster pace than it had expected and forecasted increases to 3.25% in coming periods and then falling to around 2.75% during 2023. Resolutions of many of the current supply chain issues is seen as reason for this as consumption patterns return to greater normality.
The RBA Board considers the timing too soon to draw conclusions over the sustainability of the current inflation pick-up. The Board’s target for inflation to signal a rate rise has been given as sustained in the range of 2% to 3%. The RBA notes that it will be monitoring conditions. The next RBA interest rates Board meeting is in early April.
Treasurer Announces December Quarter Figures
The first week in March also saw the release of the figures for the National Accounts covering the quarter of December 2021. These were announced by Federal Treasurer, Josh Frydenberg, and show the economy growing by 3.4% in this quarter.
The Treasurer said this was the largest growth in Australia 46 years. He said that the country is outperforming numerous others and our strong recovery from the pandemic was one of the strongest in the world. He noted the rebound in consumption following the emergence from lockdowns in both Victoria and NSW.
Mr Frydenberg said that the effects of the Omicron variant had not had the effect of derailing the economy. A statement also made by the RBA Board in its February interest rates decision statement.
Boat Loan Impacts
The RBA interest rates decision for March will be welcome news for those considering purchasing a new boat with finance. The RBA sets the cash rate from which lenders then establish their own individual rates across their lending markets.
The RBA mentioned that lending conditions remain ‘highly accommodative’ and for those seeking a boat loan that can mean a low interest rates environment will remain low for now. Although there have already been some banks and lenders that have increased their rates in some of their markets.
Our focus continues to be consistent with our guarantee of better interest rates across our boat loan and marine finance portfolio. Rates do vary on boat loans across different lenders as can be seen in the Compare Interest Rates table. The rates shown by lenders apply for new boats and good credit applicants.
While the cash rate has been once again held at the lowest rate in decades, many economists still predict a rate rise during 2022. Possibly several rises over several months. As we have stressed in a number of recent posts, getting in sooner rather than later for a boat purchase with finance would be highly advisable.
Contact Jade Boat Loans on 1300 000 003 to discuss marine finance for your new boat
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