Local real estate agent and finance professional Ian Pepper looks at the Reserve Bank of Australia's decision to keep interest rates on hold at 4.1 per cent after the board's April 1 meeting.
Inflation is Back in Target – So What’s the Problem?
The latest Consumer Price Index (CPI) figures show inflation is within the RBA’s 2-3% target range.
Mortgage holders have helped achieve this by cutting spending due to higher repayments.
So, logically, a rate cut should follow – right?
The RBA’s Justification: US Tariffs and Global Risks
The US is proposing new tariffs on imports, especially from China.
This could fuel global inflation as production costs rise and supply chains adjust.
If inflation rebounds globally, Australia could import inflation through higher costs for goods and services.
The RBA is being cautious – worried that cutting rates now could be premature if inflation rises again due to external factors.
The upcoming election in Australia was not even mentioned but everyone knows it was in the back of their minds to remain apolitical.
Are Mortgage Holders Paying for International Uncertainty?
Aussie borrowers have done their part in taming inflation, yet they continue to struggle.
Wage growth is weak, and high rates are squeezing households and businesses.
With inflation stabilising, many expected relief – yet external factors have taken priority.
Should Australians be forced to bear the burden of potential inflation risks overseas?
What Happens Next?
The RBA will likely wait for more data, especially March 2025 quarterly inflation figures, wages and economic growth.
If domestic demand remains weak, a rate cut should come next month on May 20 and more again later this year.