RBA makes cash rate call for April
Following speculation of a potential cut in interest rates this month, the Reserve Bank of Australia has now made its decision on the official cash rate for this month.
The Reserve Bank has again decided to leave the official cash rate unchanged at 1.50 per cent for April. This is the 31st consecutive month that the official interest rate has been kept on hold.
Prior to the latest rate announcement, some experts and commentators had previously predicted a possible cut for this month or in May.
Last month, My Housing Market chief economist Dr Andrew Wilson said that, if the GDP data from the December quarter was weaker than expected, the “odds would narrow for a pre-budget, pre-federal election cut in either April or May”.
More recently, Dr Wilson said that, “although momentum and expectations for a near-term rate cut has intensified, the latest market data has bolstered the RBA’s clear resolve to leave rates on hold at least for April, given the banks continued reference to employment data as the key measure for rate consideration”.
AMP chief economist Shane Oliver said that, while the threat to growth and inflation from the housing downturn via reduced construction activity and negative wealth effects is such that the RBA should cut rates, he predicted that the RBA would again keep rates on hold.
“The RBA probably needs to see more evidence that the slowdown seen in the second half last year is not just temporary, that consumer spending is under serious threat and that this will drive higher unemployment and lower for longer inflation,” Mr Oliver said.
“It will probably also want to see what sort of fiscal stimulus comes out of the budget and the federal election outcome. So, rate cuts are probably still several months off.”
Miranda Brownlee is the deputy editor of SMSF Adviser, which is the leading source of news, strategy and educational content for professionals working in the SMSF sector.
Since joining the team in 2014, Miranda has been responsible for breaking some of the biggest superannuation stories in Australia, and has reported extensively on technical strategy and legislative updates. Miranda has also directed SMSF Adviser's print publication for several years.
Miranda also has broad business and financial services reporting experience, having written for titles including Investor Daily, ifa and Accountants Daily.