Interest rates once again take centre stage as the Reserve Bank of Australia (RBA) resumes its scheduled monetary policy reviews, the business year is back in full swing and inflation figures show a further drop. This 3rd FY quarter can also be the time when many operators consider investing in new assets to realise available tax benefits prior to 30 June. For businesses considering new vehicles a key issue will be what’s on the horizon for truck loan interest rates?
To assist operators plan vehicle acquisitions, Jade Trucks Loans provides an update on issues and changes that may impact truck loan interest rates in 2024. In particular, changes being introduced this year by the RBA following the recommendations of the Review completed in late 2023.
The rate can be critical to not only the overall cost of the vehicle and monthly outgoings, but also how operators plan cash flow over the finance term. The timing of the purchase of new vehicles when rate decisions are looming may make a significant difference to enterprises.
With the release of the inflation data for December 2023 from the Australian Bureau of Statistics (ABS) which showed a fall from 4.35% to 4.1% the commentary around rate cuts appears to have intensified. While the current inflation rate is well below the RBA 2-3% target, the downward trend has market analysts and others talking rate cuts. May is being talked about as a possible timing. Further insights into the RBA’s thinking should become available after the Board’s February meeting.
RBA Interest Rates Decision Changes
One of the biggest changes to when rate decisions are made comes into effect in February. The long-standing process of the RBA Board meeting on the first Tuesday each month from February through to December is changing. Following the recommendation of the RBA Review, monetary policy decisions will now be made at 6 week intervals. This is in line with the timing of many other global central banks. This reduces the number of potential cash rate changes each year from 11 to 8.
In another change, decisions will be considered over a two day timeframe and involve a range of discussions with relevant RBA officials. The final decision being announced both by the traditional media release and in a media conference to be fronted by Governor Michelle Bullock.
This media conference is seen as a major step forward in RBA processes. It is designed to provide the public with insights around the bank’s decision on the same day as the decision is announced in addition to the bank’s forecasts for the economy. Previously, the media release was quite a brief overview and those interested in the detail needed to wait for the meeting minutes some weeks later.
One recommendation of the Review which is yet to be implemented is the new committee to be tasked with decisions on monetary policy. When in place, estimated mid-2024, this will create two separate bodies – the Board and the committee, with separate responsibilities for monetary policy decisions and the other RBA business activities.
Economic Indicators and Truck Loan Interest Rates
The key reason given for consecutive rate increases over the past few years has been the surging and persistent high inflation rate. As noted above, the ABS announced the rate has fallen again on December 2023 quarterly data.
While a fall in inflation is a good sign for consumers, businesses and the economy, it does not necessarily mean that prices for goods and supplies are actually being cut. It does indicate that prices are not rising at such a high pace. An indicator that may assist business operators better budget and manage cash flow and provide greater capacity to take on new vehicle financing.
Other data reported by the ABS may also be helpful to operators in specific sectors.
In the home building sector, the ABS reported a fall in total dwelling approvals to December 2023 of 9.5%, seasonally adjusted. Noting this fall was driven by a decline in approvals for apartments. The Bureau also reported that the value for non-residential building works also fell, by 10.6%.
The figures in the resources sector were more positive for the quarter with prices for non-rural exports rising by 6.6%. The growth attributed by the Bureau to strong iron ore and metallurgical coal price rises.
Keeping Truck Loan Interest Rates Affordable for All Operators
While the RBA sets the cash rate which flows through lending markets, our lenders set their pricing based on their own forecasts and analysis. We keep funding vehicles affordable by sourcing the right lenders from our large market coverage and using expert skills to negotiate the best truck loan rate for each operator.
The general forecast and market expectation is for a number of cash rate cuts in 2024. When exactly remains to be seen. Regardless of RBA decisions and market moves, operators can use our services to always achieve the best rate on vehicle funding.
Contact Jade Truck Loans on 1300 000 003 for best 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.