Feb RBA Minutes – no pausing interest rates, many uncertainties
Unlike at its December meeting where ‘all options were on the table’, the Board of the Reserve Bank of Australia (RBA) did not discuss the option of pausing interest rates rises at its February meeting. This was revealed with the release of the minutes of the Board’s 7 February meeting. The Board did, however, look at two options including tightening monetary policy even further with a return to a larger 0.5% hike.
What was also revealed is the Board’s concerns around the many uncertainties currently existing at both a global and a domestic level. These are seen as in relation to factors which include the speed at which inflation will actually fall as the effect of higher rates takes effect on consumer spending.
High inflation is THE reason behind the current run of interest rates hikes. Interest rates are key to truck finance and both banks and non-bank lenders tend to react to RBA decisions with their own rate changes.
With temporary full expensing ending soon, EOFY not far off, new mandatory tech coming into effect and several major truck shows coming up, many operators will be planning vehicle upgrades. To assist with the acquisition process, buyers will understandably be seeking greater clarity on interest rates to plan their truck finance. The minutes from the latest RBA Board meeting may provide a deeper understanding of the issues influencing interest rates decisions.
Minutes – February Board Meeting of RBA
The minutes are a lengthy document, but here are some of the key points discussed by Board members on 7 February:-
- Looks like global inflation has peaked, though still at extremely high rate.
- Changes to China’s COVID response has increased prices for some commodities – iron ore, coking coal, while others are lower.
- Outlook for global economy subject to uncertainties with credible possibilities for both weaker and stronger inflation and growth.
- Australia’s inflation rate to end December 2022, higher than expected. The easing of inflation globally still to be seen locally. Is expected in coming months but prices being pushed up in some areas as a result of strong demand.
- More ‘near-term’ pressure on inflation than had been though, hence the revision to the forecast.
- Big pipeline of construction sector projects supporting positive outlook for investment. Supply issues eased but labour shortages and cost rises were slowing rate of new dwellings investment.
- Uncertain outlook for Australia’s inflation and growth. Credible scenarios for both weaker and for stronger outcomes. Forecast for inflation to fall subject to uncertainties.
- Possibility that inflation could be mid the target range by the middle of 2024. But risks and uncertainties.
In regard to the critical decision on interest rates, members of the Board noted that inflation the observation that inflation had peaked as at the December rate, would not be confirmed until further data seen in coming months.
The members concurred that another rate rise was required. Data indicated that inflation was more persistent and broader than was expected and the strength in demand still pushing up prices in some sectors. Despite the expectation for inflation to fall, the risk existed that the high rate could persist. This would result in significant costs in high unemployment and even higher interest rates.
RBA Board Weighs Interest Rate Options Amid Uncertainty
The Board discussed two choices – to raise rates by 0.5% and by 0.25%. The option of holding rates was not mentioned. Arguments for both choices were discussed and those in favour of the 0.25% decision considered the strongest.
Uncertainty was noted in the inflation outlook and it was agreed by members of the Board that additional interest rates rises ‘are likely to be needed’ in coming months.
So, no hold option discussed, lots of uncertainties in regard to many of the issues and more rate rises to come. By how much the next round or rounds of rises will be is of course another uncertainty. Analysts from several of the major banks have been reported as expecting the cash rate to reach up to 4.1% in the next few months.
The answer will be revealed when the Board members meeting in early March to make their next decision.
Cover More Interest Rates Options
In times of uncertainty such as has been described by the RBA Board, it is no time to take chances. Especially around major business moves such as truck finance. Operators seeking finance to acquire new vehicles will want to cover as many options as possible to ensure they secure the cheapest truck loan.
Operators can make full use of the resources and services of Jade Truck Loans to ensure all interest rates options are covered and the cheapest option sourced. Our accreditations with multiple banks and non-bank lenders, enables our consultants to access the options quickly and efficiently and deliver the cheapest interest rate truck loan to our customers. That is at least one certainty amid the numerous uncertainties. Explore our No Financials Truck Finance options and use our Calculate Truck Loan Repayments tool to estimate your loan repayments. Additionally, we offer tailored Commercial Heavy Vehicle & Truck Loans for businesses to meet their specific needs.
To cover more options in securing the cheapest 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.
