No cash rate rise to 2024: RBA holds interest rate at record low 0.1 per cent at April 2021 meeting
The RBA have stood firm on record low interest rates at the April 2021 cash rate meeting, nothing that house prices are continuing to soar across across the nation.
The board, with newly appointed board members Carolyn Hewson and Alison Watkins, noted that housing markets have strengthened further, with prices rising in most markets.
"Housing credit growth to owner-occupiers has picked up, with strong demand from first-home buyers," RBA Governor Philip Lowe's meeting statement read.
The statement concluded with Lowe stating the board does not see a cash rate hike until 2024 at the earliest.
There are a few economists who believe there will be a cash rate hike by the end of the calendar year.
Finder's RBA cash rate survey saw six out of its 39 experts and economists it surveys every RBA month suggest there will be a rate hike, with Dale Gillham, the chief analyst at Wealth Within, expecting a rise as early as July.
Tony Makin from Griffith University, Nicholas Gruen at Lateral Economics, Noel Whittaker, QUT, Jakob B. Madsen, University of Western Australia and Clement Tisdell, UQ-School of Economics, all predict a cash rate rise in Q4 2021.
Griffith University's professor of economics Tony Makin says that despite what the RBA is saying, a cash rate rise will be inevitable should inflationary pressures suddenly build here and overseas.
"Massive government bond issues worldwide to cover large ongoing budget deficits will also continue to exert upward pressure on bond yields.
"Although asset price inflation is not officially targeted, continued escalation of housing and share prices also suggests tighter monetary policy could be warranted sooner than expected."
Harley Dale, chief economist at CreditorWatch, says the decision comes as no surprise with the RBA injecting substantial liquidity into Australia’s financial system.
"As a result, Australia’s economy appears to be firmly in recovery mode, but we tend to gauge the situation based on aggregates and averages, which is misleading," Dale says.
“There is talk of re-emerging inflationary pressures as the economy regrows itself. That would be a good thing for the Australian economy, but as long as we stay below the aggregate the economic recovery remains fractured.
“There are still significant parts of the economy being left behind despite overall improving conditions. If we can sustain an improvement in unemployment rates and the broader labour market, we will be well on our way to a full-blown recovery. We’re not there yet though and monthly statements from the RBA will likely reflect that fact in coming months.”
