Interest rates pause could be close after RBA’s 10th rate rise

RBA Interest Rate Hike and Truck Financing: What You Need to Know

After delivering the tenth interest rates rise since May 2022, the RBA has indicated that the time could be close to conditions being appropriate to pause rate increases. This remark was delivered by the RBA Governor, Philip Lowe, in a speech the day after the Board’s March 7 meeting.

But while the comment will be a welcome sign, it was also made along with the provisory that a pause would be dependent on the economic data as available. Another reason for restrained celebration was the forecast included in both the statement announcing the March rate rise and in Dr Lowe’s speech. That being that further rate rises would likely be needed to bring inflation back to target.

The recent 25 basis points rate hike brings the cash rate to 3.6%. As anticipated, lenders are poised to implement corresponding hikes on various financial products, encompassing truck finance. With this being the tenth increment and indications pointing towards more to follow, the emphasis on leveraging accessible resources becomes even more pronounced. This is where the expertise of a Truck Finance Broker Australia - Jade Truck Loans comes into play, aiding in the procurement of the most competitive rates on new truck loans.

For operators considering new acquisitions, we provide a run down of the RBA Board’s March announcement and a summary of the key points in Dr Lowe’s speech on March 8. Both resources provide information on the Board’s rationale as well as forecasts and outlooks for the economy, global impacts, inflation, the labour market and of course interest rates.

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March Rate Rise Announcement

The RBA Board met on Tuesday 7 March and decided to raise the cash rate by 0.25%.

Some of the main points in the accompanying statement include:-

• The headline rate of inflation globally is moderating. But, in the services area, many economies are still seeing elevated levels of inflation. The outlook is that it will be ‘some time’ before it returns to the target and the outlook for the economy continues to be subdued.
• In Australia, the Consumer Price Index (CPI) suggests that the peak for inflation was in the December quarter. It is expected that there will be moderation in inflation for goods prices in the coming months as demand weakens and global impacts play out.
• Services inflation however, has remained high and is attributed to strong summer demand for certain services.
• The forecast for inflation in Australia is for a decline over this and next year. The 3% rate is not expected to be reached until mid-2025.
• Australian economic growth slowed – 0.5% GDP increase for December quarter, 2.7% annual. The next few years expect to experience below trend growth. Softened outlook for house construction sector. Business investment outlook is positive.
• Tightness in the labour market continuing, but with some easing.
• The Board is alert to the risk posed by a prices-wages spiral but risk currently seen as low.
• In regard to inflation – uncertainty with when and by how much household spending will slow in response to interest rates rises and follow global trends. This uncertainty presents a number of possible scenarios for Australia.
• Priority for the Board continues to be returning inflation to the 2-3% target and further rate rises are expected to be needed to achieve this.

A more detailed account of what was discussed by Board members at this meeting will be revealed when the Minutes are released on 21 March.

RBA Governor - Keynote Speech

The day after the rate decision, Philip Lowe delivered the keynote presentation to a Business Summit. This was quite a lengthy speech covering inflation and the recent economic data and can be read in full at the RBA website. We have selected a number of points to update operators on the RBA’s thinking.

• Improvement in employment with unemployment at near 50 year low is a positive legacy of pandemic and of the invasion of Ukraine by Russia.
• High inflation is damaging, the economy does not operate well during times of high inflation – harder for business owners to make plans.
• The tool which the RBA has to ensure doesn’t become engrained and to bring it down is interest rates. Monetary policy changes work through a number of channels and take time to have an effect and work.
• Global economy is in a ‘challenging position’. Weak growth predicted by the IMF.
• In Australia, expecting subdued consumption growth for a period. This will assist in establishing a better supply-demand balance.
• Recent interest rates rises have put monetary policy into ‘restrictive territory’ – this has been necessary. Further rises are likely to be needed to address inflation.
• Now closer to appropriate point for pausing rate rises and allowing time for an assessment of the economy.

The next rate decision meeting of the RBA Board is scheduled for the first Tuesday in April.

Truck Finance Interest Rates

The major takeout for those planning new acquisitions with truck finance is that sourcing cheaper truck loan interest rates remains the highest priority. Despite this latest rate rise, Jade Truck Loans assists operators to achieve cheaper interest rates for new vehicle acquisitions through access to more banks and specialist non-bank lenders.

In addition to truck financing, Jade also offers flexible and accessible Rent-to-Own Commercial Van Finance options for businesses in need of commercial vans.

For cheaper interest rates on truck finance, contact Jade Truck Loans on 1300 000 003

DISCLAIMER: THIS INFORMATION IS ISSUED PURELY FOR THE PURPOSE OF GENERAL INFORMATION PROVISION. IT IS NOT TO BE TAKEN AS THE ONLY SOURCE OF INFORMATION FOR BASING FINANCIAL DECISION-MAKING. THOSE REQUIRING FINANCIAL GUIDANCE AND ADVICE SHOULD CONSULT WITH THEIR FINANCIAL CONSULTANT OR ADVISOR. NO LIABILITY IS ACCEPTED FOR ANY MISREPRESENTATION OF POLICIES, DATA OR ERRORS IN THIS CONTENT.