As 2022 fades into the past, operators are now setting their sights on 2023 and how to achieve their targets, or simply enhance their business prospects. Recent challenges such as floods, COVID-19, interest rate hikes, labor shortages, and supply chain disruptions have tested Australians. However, with some of these pressures showing signs of alleviation, it could be an opportune moment to put truck purchase plans into motion. Central to this decision lies the trajectory of truck loan interest rates.
Since May 2022, the Reserve Bank of Australia (RBA) has been responding to mounting inflation by progressively increasing the cash rate. For those intending to finance truck purchases, the pivotal concern centers on the developments in 2023, when the actual purchase will take place. Lenders in the truck finance domain will independently respond to rate adjustments set by the RBA. Generally, as the RBA raises rates, lending markets as a whole will experience rate hikes.
The rationale behind the RBA's rate determinations is outlined in monthly press releases, although some explanations remain relatively broad and concise. More comprehensive insights can be gleaned from the minutes of individual Board meetings. This deeper understanding is essential for businesses aiming to make informed decisions amid the changing landscape of interest rates.
The more extensive minutes are posted about two weeks after the meeting and the December minutes do reveal some interesting and illuminating insights into what could be ahead in 2023 for interest rates. We have summarised the major points we consider of greatest interest in the December minutes. Those wanting to read the full account can access the document at the Reserve Bank’s website.
December RBA Board Meeting Minutes
The Board members discussed a range of topics including developments in the domestic and international economy since the November meeting before discussing the options for the cash rate rise for the month.
Major points re developments in the economy included:-
- Inflation is remaining at high levels in many countries but appears to have peaked in some.
- COVID-related challenges continue to be a major issue in China.
- Global supply chain constraints appear to be normalising.
- Australian economic data is congruous with the assessment made by the RBA Board in November.
- Inflation in Australia remains high but with a slight drop in the October figures. But this should be taken with caution as a number of factors such as electricity prices were not included and would appear in the end of quarter data.
Of high interest for those planning truck purchases with finance will be the discussion by the Board members around what the December cash rate rise should be. It may come as a welcome surprise that the Board did discuss a number of options, including leaving interest rates unchanged. However, that was not the eventual outcome with arguments for a further 0.25% increase deemed the strongest.
So what was discussed? The Board discussed a number of arguments for and against the options of a return to a larger 0.5% cash rate rise, continuing with the 0.25% increase and the zero change option.
The discussions around the higher 0.5% increase included that inflation remained high and the issues around the demand and supply imbalance continued. But the cash rate was not seen to be at historic highs so far and if the Board need to implement stronger actions in the future, it would take time for demand to weaken.
The discussions around not increasing the cash rate included that there was a lag between interest rate rises being evident in economic data. The recent forecasts indicated that even with more rate increases, it would be a few years before inflation dropped to the target level. The Board also discussed the value in cautious continuation of rises considering the uncertain environment. It was also noted that no other central bank had yet paused cash rate increases.
But it was the arguments for another 0.25% cash rate increase which the Board members considered were the strongest at the time. These include that it would take time to see the effects of the significant rises already implemented and that the demand-supply imbalance needed addressing.
Another important consideration was seen as the need for a level of consistency from the Board. In positive news for those considering finance, is that at its next meeting, due in February, a number of options would again be considered.
RBA Governor Lowe did back-up these discussions in remarks in speeches and interviews where he said that a return to large 0.5% hikes and the option of holding the cash rate steady were not being ruled out by the Board.
Consideration for Truck Loan Interest Rates
For starters, the next meeting of the RBA Board is not until February. So no further rate rises would be announced until then. For operators ready to move on acquisitions, Jade Truck Loans can respond promptly to source and negotiate finance at current cheaper truck loan interest rates.
But as noted above, lenders in the truck finance space, especially non-bank lenders, make their own decisions around their own interest rates. Some will respond to RBA decisions while others may move earlier or hold their own rates steady.
These independent decisions can result in quite a varied market in regard to interest rates on truck finance offered by different lenders. Highlighting the need for operators to have quick and easy access to many lenders in order to source the cheap truck loan interest rates. A service which is integral and central to our role as a broker-style lender.
Our accreditation with many lenders – major banks as well as specialist non-bank lenders, allows our customers the major benefit of that easy access to the cheapest rates. Using Jade Truck Lending, you can take full advantage of these competitive rates for your truck financing needs.
While the minutes from the latest RBA meeting do not give any definite directions on where rates will go in 2023, they do provide interesting and hopefully helpful insights as to the possibilities. If you're looking to make informed financial decisions based on these insights, consider obtaining an Easy Online Truck Finance Interest Rates Quote to explore your options further.
Contact Jade Truck Loans on 1300 000 003 to move quickly to secure current cheap truck loan interest rates.
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.