Despite calls to make a move, the RBA Board showed it is prepared to patient by keeping the official cash rate on hold at its first meeting for 2022. The 1 February meeting was quite widely anticipated as much has transpired in economic terms since the Board last met at the start of December 2021. Omicron has been raging through most states causing staffing issues and uncertainty, inflation is surging and global supply chains continue to impact the local markets. Calls and forecasts for the RBA to act have seemed to be increasing. But as it has done for the past 12+ months the RBA Board held its line.
So what is happening with the interest rates in general, boat loan rates more specifically and what can prospective buyers expect in the near future? We cover off on the take-outs from the RBA’s February 2022 meeting to enlighten and provide some level of clarity in uncertain times.
RBA February Rate Decision
The RBA Board cut the cash rate to the historic low of 0.1% in November to continue to stimulate the Australian economy against the impacts of COVID-19. The rate has remained unchanged since with the Board consistently giving an indication of 2024 as the time when it considered their targets would be met to indicate a rate rise was necessary.
Based on comments made in the statement accompanying the rate announcement and an address given by the RBA Governor the day after the announcement. It is increasingly likely that the timeframe will be accelerated with a rise highly possible this year.
While Omicron has impacted the economy, the recovery has continued, well at least not derailed as the RBA statement puts it. While the pandemic continues to create uncertainty, spending is expected to lift as the current case number continue their downward trend.
Additional positive indicators are the good position of balance sheets for households and business; business investment lifting; significant works in construction pipelines; and macro policy settings providing support to the economy.
The RBA had targeted 4% unemployment and in December the figures posted this at 4.2% and continue the trend downward. This indicates a strong labour market recovery. The current forecast by the RBA is for unemployment to hit sub-4% levels this year and 3.75% by the conclusion of 2023.
Wages growth has shown some level of lift but as predicted it is only low. But as the labour market tightens further, wages growth should show a gradual rise.
The spike in inflation has been a major reason that many are calling for a rate hike. The RBA notes that the rate of inflation has risen faster than it had anticipated. How supply chains may affect prices still remains an uncertainty.
In regards to inflation, the RBA Board is prepared to stay patient and is still targeting 2-3% sustained inflation before raising the official cash rate. While inflation had risen recently, it said that it was too early to draw the conclusion that this was indicative of a sustained level.
On 2 February Dr Philip Lowe, Governor of the RBA, delivered the keynote address to the National Press Club. This address covered the February Board decision and provided further information on the Board’s forecast and outlook for the economy in general.
In summary, Dr Lowe said he was optimistic around the prospects for Australia. He said that while the country had weathered the pandemic well and key indicators such as unemployment, jobs growth and balance sheets were in a good position, there were still challenges.
A key point raised was that Australia was closing in on achieving a major milestone in unemployment. If the 3.75% forecast was achieved it would represent the lowest rate in the past 50 years.
He reflected on 2021 economic figures to provide insight into forecasts for 2022. A full copy of his address is available for those interested in more detail.
Boat Loan Interest Rate Position
So where does all this place the situation in regard to interest rates on boat loans? Planning a boat purchase can often be made over quite a period as buyers weigh up what makes and models are available and take into consideration other factors pertinent to a major purchase. Another current issue is availability. Supply chains are impacting stock availability of many goods and that is causing delivery delays.
The cash rate is a basis from which lenders including those in the marine finance sector set their rates. So if the RBA does move on the cash rate, it could be expected that boat loan interest rates could also rise. By how much will depend on individual lenders. A rise in the cash rate could occur as early as August according to some forecasts.
In order to ensure we are always in a position to secure the cheapest interest rate for our customers, Jade Boat Loans holds accreditation with a vast selection of lenders. Those that specialise in marine finance will tend to want to remain highly competitive. But a general lift in rates will likely flow through all lending sectors.
So the bottom line is now somewhat of a sense of urgency for those considering a boat purchase with finance in the near future. To secure your loan to assist in forming your buying plans, speak with us for a pre-approved boat loan at current cheap rates.
For assistance in sourcing the cheapest interest rate boat loan, contact Jade Boat Loans on 1300 000 003
DISCLAIMER: THE INFORMATION AND SPECIFIC DETAILS CONTAINED IN THE CONTENT OF THIS ARTICLE HAVE BEEN PREPARED AND ARE PRESENTED PURELY AS GENERAL INFORMATION AND NOT INTENDED AS THE ONLY SOURCE OF FINANCIAL ADVICE FOR BOAT BUYERS AND LOAN BORROWERS. FOR THOSE THAT CONSIDER THEY REQUIRE SPECIFIC ADVICE, THEY SHOULD CONSULT WITH A FINANCIAL ADVISOR. LIABILITY IS NOT ACCEPTED IN REGARD TO ERRORS AND MIS-PRESENTED DATA AND DETAILS HEREIN.