Australian mortgage holders might finally be in for a reprieve on interest rates, with the Reserve Bank indicating it will consider a pause in hikes at its next meeting.
Minutes from the bank’s March meeting, released on Tuesday, show the RBA board members acknowledged that the “economic outlook was uncertain”, and monetary policy was now restrictive.
“Members agreed to reconsider the case for a pause at the following meeting, recognising that pausing would allow additional time to reassess the outlook for the economy,” the minutes from the March 7 meeting said.
“The considerations meant it would be appropriate at some point to hold the cash rate steady to assess more fully the effect of interest rate increases to date.”
The minutes show RBA board members noted conflicting signals about the strength of the Australian economy and the pressures under-pinning high inflation.
They mirror comments by RBA governor Philip Lowe following the March meeting, when he said interest rates were in restrictive territory and the bank was getting closer to a pause.
In a speech following the decision to impose a 10th rise in the official cash rate, Dr Philip Lowe said the “more recent rate increases” had moved interest rates into restrictive territory, which is where monetary policy is high enough to slow growth in the economy.
The Reserve Bank has raised the official cash rate every month since last May. It is now at 3.6 per cent, the highest level since 2012.
The 10 consecutive rate rises have piled an extra $983 onto monthly repayments for a $500,000, 25-year home loan, according to RateCity figures – or nearly $11,800 in annual repayments.
Minutes from the March meeting show the board’s concern at the rapid rises.
“Members agreed to reconsider the case for a pause at the following meeting, recognising that pausing would allow additional time to reassess the outlook for the economy,” the minutes showed.
“At what point it will be appropriate to pause will be determined by the data and the board’s assessment of the outlook.”
-more to come
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