Cash rate likely to stay put until 2024 – According to the Reserve Bank
It has come as no surprise to the banking and finance industry that the Reserve Bank of Australia has kept the current cash rate at 0.1%. In a statement, RBA governor said that while recent vaccine developments have improved the outlook for the global economy, the path to Australia’s economic recovery depends, not only on the health situation as it unfolds, but also on “significant fiscal and monetary support.”
The Board remains committed to maintaining highly supportive monetary conditions until its goals are achieved. Given the current outlook for inflation and jobs, this is still some way off. The current monetary policy settings are continuing to help the economy by lowering financing costs for borrowers, contributing to a lower exchange rate than otherwise, supporting the supply of credit needed for the recovery and supporting household and business balance sheets. The decision to extend the bond purchase program will ensure a continuation of this monetary support.
Statement by Philip Lowe, Governor: Monetary Policy Decision
Lowe reiterated that the RBA would not increase the cash rate until actual inflation fell between the board’s 2-3% target range, adding that wages growth would have to be much higher than it currently is for this to occur.
This will require significant gains in employment and a return to a tight labour market,” he said. “The Board does not expect these conditions to be met until 2024 at the earliest.
We are still seeing the most competitive rates we have ever seen. Some fixed rates for owner occupiers as low at 1.89% with investor home loan rates also reducing in recent times. This will hopefully encourage investors to re-enter the property market.
When trying to decide whether to fix and for how long regarding any mortgage – it is always best to fix in line with your plans. To payout any fixed loan early can be costly and trying to “predict” how and when markets will change, or rise is a difficult task.
With rates this low – make the most of any extra payments you can do, look at splitting your loans with a portion variable to give you some flexibility and get ahead while you can.
Certainly, talk to me regarding your personal circumstances and options available to you to take advantage of such low rates.