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RBA Rates Update Mar 22

01.03.22 | Marc Barlow | Reserve Bank Announcements

The RBA monthly board meeting held firm on the rock-bottom cash rate of 0.1% today despite speculation of a rate rise.


What we know is the cost of borrowing money in Australia — largely due to the RBA’s cushioning response to the pandemic’s economic ructions — remains at an historic low.


However, speculation from market watchers is that rate rises — however incremental and modest — may happen sooner rather than later.


It’s no surprise that rate rises are a hot topic for media and market analysts given the last time Australians saw a rate rise by the RBA was November 2010.


Driving speculation is an increasing Aussie inflation rate, which has exceeded the 2-3% band. The CPI (Consumer Price Index) is now 3.5% while wages growth continues to stall.

‘Inflation has picked up more quickly than the RBA had expected, but remains lower than in many other countries,’ noted the RBA today.

‘The central forecast is for underlying inflation to increase further in coming quarters to around 3.25% before declining to around 2.75% over 2023.

‘The CPI inflation rate will spike higher than this due to the higher petrol prices resulting from global developments.’


The RBA’s opinion is the only one that matters. And it has consistently said since the pandemic began that it will not increase the cash rate until inflation is “sustainably” in the 2 to 3 percent band.


Sustainable is the key word. Last month, RBA Governor Dr. Phillip Lowe explained to the House of Representatives Standing Committee on Economics that it was too early to say that inflation was “sustainably” in that target range of 2-3%.


He also pointed to the underlying inflation rate of 2.6%, which backed his assessment that a cautious approach is needed in the current climate.


Lowe explained to the committee that the RBA is prepared to be patient. “We have scope to wait and see how the data develops… I recognise that there is a risk to waiting but there is also a risk to moving too early,” he said.


The RBA won’t be swayed by speculation or criticism, either. Even when it comes from heavyweights like former Federal Treasurer Peter Costello.


The Future Fund Chairman in recent weeks has questioned long-term RBA projections of rate rises being “plausible” by 2023 or 2024.


“It’s [the RBA] got to start preparing the market for rate rises,” Costello told the Financial Review. “Whether they come in the back end of this year or whether they come next year. I think you’ve got to start preparing.”


For the RBA, it’s a balancing act with the pandemic skewing certain economic conditions. That said, supporting the economy remains a crucial objective for the RBA as we start to see the effects stemming from the Russian invasion of Ukraine and the improving pandemic situation.

‘The global economy is continuing to recover from the pandemic. However, the war in Ukraine is a major new source of uncertainty,’ said the RBA.

‘The Australian economy remains resilient and spending is picking up following the Omicron setback.

‘Household and business balance sheets are in generally good shape, an upswing in business investment is underway.

‘Financial conditions in Australia continue to be highly accommodative. Interest rates remain at a very low level, although some fixed rates have risen recently.’


Today’s announcement underlines the conducive conditions for many home loans on the market. While house prices are still very high, rates for borrowing money are very low.


With that in mind, Mortgage Broker Group can help find a loan that works for you. We are an accredited member of the Mortgage and Finance Association of Australia (MFAA) and from 241 reviews on we have a five-star rating.


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