Outlook ‘remains uncertain’ say policymakers
As widely expected, the Reserve Bank of Australia (RBA) has kept the cash rate unchanged at 4.1%, following February’s long-awaited 25-basis-point cut.
Economists at each of the Big Four banks universally agreed that an April hold was bolted on, reflecting a conservative approach from the RBA amid lingering inflation fears.
Announcing the latest hold, the RBA said the outlook “remains uncertain”.
“Private domestic demand appears to be recovering, real household incomes have picked up and there has been an easing in some measures of financial stress.
“However, businesses in some sectors continue to report that weakness in demand makes it difficult to pass on cost increases to final prices.”
"The bank added that “sustainably returning inflation to target is the priority”.
Mortgage market reacts
Mortgage aggregator Connective’s executive director Mark Haron called the hold “expected, even as recent headline inflation showed a slowdown”.
Haron said: “Financial pressure remains a reality for many households, and while the Federal Budget included measures to ease cost-of-living pressures, their impact will take time and depend on the outcome of the upcoming federal election.
“The most important step for brokers right now is to proactively communicate with their clients. We’ve observed a surge in borrower inquiries for every RBA cash rate decision, so those who reach out first, rather than waiting, will deepen their existing client relationships and create more opportunities.”
“Given the RBA did not move at this meeting, we believe a rate reduction is warranted and likely in May,” non-bank lender Bluestone’s chief executive Mark Jones told MPA, adding: “Bluestone saw some confidence return to home buyers after the February interest rate reduction.
“We believe further rate reductions are appropriate through the remainder of 2025, reflecting increased global uncertainty and continued improvement in inflation in Australia.”
AMP Bank economist Shane Oliver said that “while monthly inflation has continued to trend down and jobs data was mixed in February, the RBA clearly prefers to wait and see the March quarter CPI data to be released later this month”.
The RBA “remains wary about cutting again given its concern that the jobs market is still tight risking inflation remaining too high”, Oliver said, adding: “Being in the midst of an election campaign was probably another, albeit unspoken, reason for the RBA to hold in the absence of a strong reason to do anything.”
