Interest rate hikes have been temporarily put on hold, bringing relief for many Australians
(Photo: Reserve Bank of Australia)
The Reserve Bank (RBA) has put interest rates on hold temporarily following yesterday’s board meeting on April 4.
Interest rates will remain at 3.5 per cent and the cash rate target will stay at 3.6 per cent, but this still remains at its highest since May 2012.
After ten historic interest rate hikes since May 2022, renters, buyers and borrowers are sighing a breath of relief.
Acknowledging inflation has peaked, rent is skyrocketing with low vacancy rates, and increased cost of utilities, the RBA stated they will wait for the effects of the previous hikes before deciding on the next move.
RBA Governor, Phillip Lowe, released a statement on the Bank’s decision to temporarily freeze interest rates, outlining policy takes effect slowly and Australia is yet to feel the full effects of inflation.
“The Board took the decision to hold interest rates steady this month to provide additional time to assess the impact of the increase in interest rates to date and the economic outlook,” Lowe said.
“Global inflation remains very high. In headline terms it is moderating, although services price inflation remains high in many economies.
“The outlook for the global economy remains subdued, with below-average growth expected this year and next.”
While the inflation pause eases some cost of living concerns, this isn’t a permanent solution.
Lowe expects some “further tightening may well be needed” for inflation to return to its target.
“The Board’s priority is to return inflation to target. High inflation makes life difficult for people and damages the functioning of the economy,” he said.
Students across Australia are feeling the effects of high inflation as well, and many are welcoming the RBA’s decision.
As inflation increases, so too do HECS-HELP debt balances.
While there is no interest charged to the university debt, indexation is added on June 1 of each year, according to the Australian Government’s Study Assist.
This indexation is tied to the cost of living price around Australia, which connects to inflation levels. Meaning high levels of inflation will inadvertently increase debts.
So, while people across Australia hold their breath to see the RBA’s findings over the year, Lowe remains certain things will improve in the long term.
“The Board remains resolute in its determination to return inflation to target and will do what is necessary to achieve that,” Lowe said.