The Reserve Bank of Australia has once again left interest rates on hold at the record low rate of 0.1%.
The last time the RBA lifted the official cash rate was back in November 2010.
In this afternoon’s statement issued by the RBA, Governor Philip Lowe said: ‘’Financial conditions across Australia continue to be highly accommodative, with interest rates remaining at a very low level, although some fixed rates have risen recently.’’
The RBA also referenced the ongoing uncertainty of Covid-19 and the Ukraine crisis.
‘’The global economy is continuing to recover from the pandemic. However, the war in Ukraine is a major new source of uncertainty.’’
John Kolenda the CEO of major broker aggregator Finsure said Russia’s invasion of Ukraine and the impact of natural disasters on home soil had delayed any monetary policy tightening by the RBA.
“Putin’s actions have shocked the world and moved the goalposts for the RBA which had been navigating its way through the economic rollercoaster of the COVID-19 pandemic,” said Kolenda.
Kolenda said he believed the RBA is on course for a mid-year increase in the official interest rate.
“The RBA will just have to wait and see how these crises unfold over the coming months. In response to the Russia invasion in Ukraine, many central banks around the world which were looking to raise their interest rates will be in a quandary,” said Kolenda.
Along with current global uncertainty, the flood disaster in south-east Queensland and northern NSW will also impact the central bank’s deliberations.
“Over the coming months as the economic data comes out, we will get a better idea as to when rates will rise,” said Kolenda.
Kolenda said increased competition for skilled workers is continuing to contribute to greater inflationary pressures and eventually an interest rate rise.
“There is no doubt rates are set to rise, it is now only a matter of time. There is continued inflationary pressure across the economy produced by the COVID effect and major supply chain issues where we are also seeing industries challenged by staff shortages, all of which put pressure on inflation. The RBA will cautiously deliberate any move until we get greater clarity on the Ukraine war and the settling of global concerns.”
