After 10 consecutive rises the Reserve Bank of Australia has put interest rates on hold. Photo: 123RF
The Reserve Bank of Australia (RBA) has given mortgage borrowers a reprieve, at least temporarily, by leaving interest rates on hold at a board meeting on Tuesday.
After 10 consecutive rate rises, the RBA opted to wait and see how the economic data plays out, amid early signs that the increase in rates so far is starting to weigh on consumer spending and lower inflation.
However, RBA governor Philip Lowe was offering no assurances that interest rates would not rise again.
"The board expects that some further tightening of monetary policy may well be needed to ensure that inflation returns to target," he said in his post-meeting statement.
"The decision to hold interest rates steady this month provides the board with more time to assess the state of the economy and the outlook, in an environment of considerable uncertainty."
The decision leaves the RBA's cash rate target at 3.6 percent, which is still the highest level since May 2012.
Official interest rates have risen 3.5 percentage points from the pandemic emergency low of 0.1 percent.
RateCity said those rate increases had already added almost $1000 a month to repayments on a $500,000 principal and interest loan with 25 years remaining.
The Reserve Bank of New Zealand is reviewing the official cash rate on Wednesday 5 April and is expected to go ahead with a 25 basis point increase to 5 percent making it its 11th consecutive increase.
Temporary pause could become 'more permanent'
Indeed Asia-Pacific economist Callam Pickering, who used to work at the Reserve Bank, said he expects the Australian economy to slow considerably over the second half of the year making further rate rises unnecessary.
"This is centred on the belief that household conditions will deteriorate due to the combination of much higher mortgage repayments, falling asset prices and the unprecedented decline in inflation-adjusted wages.
"This is a recipe for an economic slowdown if ever I've seen one.
"[The RBA board] are likely to take the next month or two, at the very least, to assess how those earlier rate hikes have impacted the economy.
"We think the impact will be large enough for this temporary pause to become a more permanent one."
- ABC / RNZ