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The Reserve Bank of Australia (RBA) has decided to leave the official cash rate at 4.1 per cent during the April monetary policy meeting.
The move was expected by markets and economists for several reasons, particularly the board’s hawkish stance following the rate cut during the February meeting, a lack of material economic data prior to the meeting (the March quarter CPI print, for example), and growing geopolitical uncertainty.
The hawkish rhetoric was on display once more in the following Statement by the Monetary Policy Board: “The board’s assessment is that monetary policy remains restrictive.
“The continued decline in underlying inflation is welcome, but there are nevertheless risks on both sides and the board is cautious about the outlook.”
The statement further said that the RBA will continue to rely on emerging data and the evolving assessment of risks to guide its decisions.
“The board is resolute in its determination to sustainably return inflation to target and will do what is necessary to achieve that outcome,” it said.
The RBA also noted significant uncertainty concerning the “outlook abroad”, particularly the looming Donald Trump tariffs set to take effect tomorrow (2 April), which are “having an impact on confidence globally” and would “likely be amplified if the scope of tariffs widens, or other countries take retaliatory measures”.
The statement acknowledged easing inflation over recent months, however, expressed further caution from board members that progress will continue in the right direction for inflation to remain sustainably in the 2–3 per cent range.
“The board noted that monetary policy is well placed to respond to international developments if they were to have material implications for Australian activity and inflation,” it said.
Despite the decision to hold, CoreLogic (which will soon rebrand to Cotality) research director Tim Lawless said that “two of the RBA’s pain points have seen some relief”, referring to easing inflationary pressures and some “early signs of loosening in labour force indicators”.
“However, the RBA is still wary about low productivity domestically as well as the uncertain outlook amid global trade and geopolitical tensions,” Lawless said.
“Although rates were kept on hold today, as most expected, the February rate cut has already influenced housing markets, sending home values 0.3 per cent higher in February before rising 0.4 per cent in March.”
Lawless said that the outlook for interest rates “remains positive”, with more cash rate cuts likely to occur over the year “but only gradually”.
“The quarterly inflation outcome, which will be released on [30 April] ahead of the RBA’s next board meeting, will be a key factor influencing the RBA’s decision in May,” he said.
“If core inflation holds below the 3 per cent mark, which seems highly probable, it is looking more likely that we will see a second cut to the cash rate.”
CEO of Mortgage Choice, Anthony Waldron, said that the hold in the cash rate reflects the “consistently cautious tone from board members”.
“While I expect we’ll see another cut to the cash rate this year, the RBA will want to see the impact of the February rate cut flow through to the economy before making another change,” Waldron said.
“The February rate cut encouraged borrowers around the country to review their home loans. We saw an uptick in the number of borrowers looking to refinance over March, with the proportion of Mortgage Choice loan submissions for refinance rising month on month.”
Reacting to the decision, executive director at Connective, Mark Haron, said financial pressure remains a reality for many households and while measures to alleviate cost-of-living challenges were included in the federal budget, the impact will take time and depend on the upcoming election.
“The most important step for brokers right now is to proactively communicate with their clients,” Haron said.
“We’ve observed a surge in borrower inquiries for every RBA cash rate decision, so those who reach out first, rather than waiting, will deepen their existing client relationships and create more opportunities.
“Off the back of the last RBA rate decision, we’ve seen borrower activity surge, with February recording the highest proportion of pre-approvals since 2021. This is a strong lead indicator that more borrowers will enter the market in the short term, signalling confidence in lending conditions.”
Haron said that the broader picture is complex and brokers should remain vigilant as rising demand could see property prices rise even more, which compounded with cost-of-living hurdles, will make securing finance a challenge for borrowers.
“Brokers who leverage digital tools effectively are ensuring they remain visible and accessible, helping borrowers navigate a shifting market,” he said.
[RELATED: No fooling around – rate cuts off the table in April]
