RBA sets official cash rate for March as JobKeeper end looms

AMP Capital chief economist Shane Oliver said that while the economy has recovered faster than expected, the RBA is still a long way away from meeting its inflation and employment goals, so a rate hike is still a long way away.

“That said, the faster than expected recovery will likely see the first hike occur earlier than the RBA’s expectation of no increase before 2024. It could come late next year or early 2023,” Mr Oliver said.

Mortgage Choice chief executive Susan Mitchell said economic indicators reveal a strong bounce-back in the domestic economy.

“The housing market is booming, fuelled by an extremely low interest rate environment and fiscal stimulus. Unemployment has recovered from its pandemic peak and consumers are confident. The rollout of the COVID-19 vaccine will bolster consumer confidence in the months ahead,” Ms Mitchell said.

“All these factors would encourage RBA Board members to maintain the cash rate at its record low for the foreseeable future.”

Last month, RBA governor Philip Lowe said he backed the government’s intention to end JobKeeper at the end of March.

“Given the recovery of the economy, I can understand why the government wants to stop that program,” Mr Lowe said.

“Am I disappointed the government’s stopping the JobKeeper program? No.

“The government made it very clear this was a temporary program. It’s been an incredibly important program. It has saved many people with jobs and helped people in their lives.”