Owners and operators considering a truck purchase or possibly refinancing a truck loan to ease cash flow and price rise pressures, will no doubt be keeping an eye on truck loan interest rates. There has been extensive commentary from analysts, economists and even leading banks around the need for the RBA to increase interest rates. Despite this, the RBA March decision on interest rates was to leave the cash rate on hold.
The RBA Board convenes monthly, and given the emergence of new global and domestic challenges since the February meeting, as well as the intensifying calls for a rate increase, the meeting held on Tuesday, March 1st, was keenly observed. Following these meetings, the RBA issues a statement on the Monetary Policy Decision, which sheds light on the central bank's rationale behind its choices and its economic outlook.
In the March statement, the RBA announced its decision to maintain the cash rate at the level of 10 basis points, equivalent to 0.1%. This rate has remained unchanged since November 2020. Philip Lowe, the RBA Governor, explained that the global economy was in the process of continuing its recovery from the pandemic.
However, Mr. Lowe acknowledged the emergence of the war in Ukraine as a "new source of uncertainty." He pointed out that inflation had sharply increased in certain parts of the world, largely due to rising energy prices and supply chain disruptions amid robust demand periods. The conflict in Ukraine has further amplified the prices of many commodities.
In the context of Australia, the RBA reported that the economy's resilience had remained intact, and spending had rebounded following setbacks caused by the Omicron outbreak. The business sector has shown increased investment, and a substantial volume of construction projects is in progress. Both businesses and households are deemed to have sound financial positions.
Unemployment stands as a pivotal indicator for the RBA's decisions regarding interest rates. Currently, at a 14-year low of 4.2%, it serves as evidence of the economy's robustness. The RBA's projection is for this rate to dip below 4% later in 2022 and to remain under 4% throughout 2023.
The bank recognizes that the acceleration in inflation has occurred at a faster pace than anticipated. The RBA has consistently communicated its inflation target for a rate rise, which entails sustaining inflation within the 2-3% range. The forecast indicates that underlying inflation will rise in the upcoming quarters, reaching around 3.25%, before tapering to approximately 2.75% in 2023.
The CPI (consumer price index) inflation rate is projected to experience a temporary spike at a higher rate than the underlying measure, primarily due to elevated petrol prices resulting from global events. The RBA identifies the resolution of supply chain issues as a potential source of uncertainty in relation to inflation. With interest rates remaining at historically low levels, the financial conditions continue to be classified as "highly accommodative."
The statement concludes by reiterating the RBA's prior declarations that it remains committed to exercising patience and sustaining highly supportive monetary conditions. These actions are undertaken in order to attain the objectives of achieving full employment and returning inflation to the targeted levels as set forth by the RBA.
National Data – December Quarter
The national accounts figures and other Australian economic data will also no doubt be of interest to truck owners considering upgrading vehicles. Treasurer Josh Frydenberg released the figures for the December quarter 2021 in the first week of March.
The economy's growth of 3.4% in the quarter stands as the most substantial increase in 46 years. The Treasurer underscored that Australia was surpassing many other nations and highlighted that the country's rebound from the coronavirus pandemic ranked among the most robust worldwide.
In alignment with recent statements from the RBA, Mr. Frydenberg emphasized that the Omicron variant had not resulted in a setback for Australia's economy.
Looking ahead, the next significant announcement from the Federal Treasurer is slated to be the unveiling of the Federal Budget on March 29th. This date has been moved up from the customary May timeline due to the impending Federal Election.
Impacts for Truck Loans
With interest rates once again on hold, our truck loan interest rates will remain at the low levels across our loan portfolio – Leasing, Chattel Mortgage, Rent to Buy and Commercial Hire Purchase. Despite the decision by the RBA in regard to the official cash rate, some lenders have already lifted their rates in some of their lending markets. The cash rate is of course the rate of lending between banks and lenders set their own lending interest rates.
Jade Truck Loans offers a fixed interest rate across truck loan options so our customers are assured that the rate achieved with their loan will remain consistent over the full, possibly 7 years of their loan. For those considering refinancing to address the pressures of rising prices, doing so while rates are still low could be a savvy decision. Being mindful of the costs associated with refinancing which your Truck Finance Broker Australia - Jade Truck Loans will detail to you.
While the cash rate is on hold for now, many economists still predict a rise by June and possibly several during the second half of 2022. The next meeting of the RBA will be early April.
Contact Jade Truck Loans on 1300 000 003 for a low interest rate truck loan quote.
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