RBA reaffirms no cash rate rise until 2024

Prices are rising in all major markets, the RBA noted

RBA reaffirms no cash rate rise until 2024
RBA reaffirms no cash rate rise until 2024

Housing markets have continued to strengthen, with prices rising in all major markets, the RBA has noted. Housing credit growth had also picked up, with strong demand from owner-occupiers, including first-home buyers.

The central bank noted there has also been increased borrowing by investors.

"Given the environment of rising housing prices and low interest rates, the bank will be monitoring trends in housing borrowing carefully and it is important that lending standards are maintained."

The board indicated its remained committed to maintaining highly supportive monetary conditions to support a return to full employment in Australia and inflation consistent with the target. "It will not increase the cash rate until actual inflation is sustainably within the 2 to 3 per cent target range," the RBA governor Philip Lowe advised.

"The bank's central scenario for the economy is that this condition will not be met before 2024." It had previously advised “2024 at the earliest.”

However cash rate futures for June 2023 rose to 0.53%, up from 0.44% prior to the RBA’s meeting, indicating that the market expects rate hikes before 2024.

The statement noted the economic recovery in Australia is stronger than earlier expected and is forecast to continue.

But despite the strong recovery in jobs and reports of labour shortages, inflation and wage outcomes remain subdued. "While a pick-up in inflation and wages growth is expected, it is likely to be only gradual and modest.

"In the central scenario, inflation in underlying terms is expected to be 1½ per cent over 2021 and 2 per cent by mid 2023.

"In the short term, CPI inflation is expected to rise temporarily to about 3½ per cent over the year to the June quarter because of the reversal of some COVID-19-related price reductions a year ago."

Jonathan Chancellor

Jonathan Chancellor

Jonathan Chancellor is one of Australia's most respected property journalists, having been at the top of the game since the early 1980s. Jonathan co-founded the property industry website Property Observer and has written for national and international publications.

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