With both a pause and a rise in interest rates possible at the next RBA meeting, Business Finance updates on rates to assist operators with finance decisions. The Reserve Bank (RBA) Board has announced ten rate rises consecutively since May of last year. But based on discussions at the RBA Board’s March meeting, a pause in those increases may be upcoming. There was discussion of a pause at the December meeting, as revealed in the minutes. Governor Philip Lowe backed that up at the time with remarks that all options were on the table. But the economic conditions prevailing by the February meeting meant the pause was not discussed. However, the minutes of the March RBA Board meeting do reveal that the option of pausing interest rate increases will be discussed at the upcoming April meeting. The optimism around that revelation may be moderated by the discussion at the same meeting, that it is likely that more increases will be needed. While the basic overview of each cash rate decision is covered in the Monetary Policy decision statement issued on the day of the decision and the key points highlighted by the media, reading the full minutes can provide greater insights. The minutes cover all the topics discussed by the Board. The outlooks and forecasts for different economic indicators and conditions, both here and overseas, may be of value to many business operators. Certain industry sectors such as construction and retail are often discussed specifically. This may assist businesses in those areas currently planning acquisitions of new machinery with Equipment Funding We provide a brief recap of some of the topics discussed at the 7 March meeting with particular focus on those impacting interest rates. International Economic Conditions A discussion of the international economic conditions was the first item on the agenda. It was observed that the rate of inflation was still high globally and over the target for many central banks. An easing had been seen but rates were still too high. Unemployment remained low. Following its different approach to pandemic containment, compared with many other countries, China was only in the early phases of economic recovery from the pandemic. Australian Economic Conditions This meeting was held prior to the release of a number of key indicators by the Australian Bureau of Statistics (ABS).  This timing should be noted to put the discussions into perspective. The Board noted that the expected economic slowdown for the quarter ending December and for the early part of this year was confirmed in the February figures. It was noted that the major indicators remained unchanged. There is a positive outlook for business investment despite some easing. The difficulty in making overall assessments of the labour situation based on the January unemployment figures was discussed. The difficulties arising due to the seasonal influences of data at that time. Growth in wages was noted as a matter of concern with data showing a lower than expected increase in the December quarter following the stronger September quarter data. Productivity growth was discussed as a major cause of concern. There has not been net growth in productivity for the last 3 years,. For businesses that are facing increasing costs for their labour, this means they are not realising any offsets for those cost impacts. Interest Rates Outlook In making the decision on monetary policy in March, the Board considered several factors, including the underperformance of key data sets such as wages, GDP, labour conditions, and inflation, all of which fell short of expectations. The inflation rate remained high, exceeding the RBA's target of 2-3% and is forecasted to persist above this target until mid-2025. In light of these factors, the decision was made to raise interest rates by 0.25%. It is likely that additional rate increases will be necessary, as discussed in the minutes. The minutes also reveal that the Board acknowledged the uncertainty surrounding the outlook for the economy, and recognized that rates are now in what they referred to as a "restrictive" range. Furthermore, discussions were held regarding the possibility of a pause in rate hikes, which may be the appropriate decision as the economy reaches a critical point. The Board has decided to further discuss this matter at the next meeting, and as a Business Funding Professional, we will continue to monitor these developments closely. Business Finance Interest Rates Following shortly after this meeting was the news from the US of the collapse of the Silicon Valley Bank and from Switzerland of troubles with Credit Suisse. This news was quickly followed with the February labour data as mentioned by the Board. These two issues resulted in mixed reactions from the markets. Westpac reduced its forecast for the cash rate peak to 3.85%. But the ANZ has retained its forecast for a 4.1% peak. That would mean more increases on the horizon. Banks and non-bank lenders do make their own decisions re rates, especially in the commercial lending area. This means that there are fluctuations in Business Financing Rates across various financial products, and our consultants have the potential to identify the most affordable option available at any given time. The next meeting of the RBA Board re rates is Tuesday 4 April and the ABS is due to release the monthly CPI data on 29 March. Regardless of the next rate decision, businesses are urged to speak with us about their finance requirements to ensure any EOFY tax deductions are realised. For cheaper interest rates on all types of commercial finance, contact Business Finance Australia on 1300 000 033 DISCLAIMER: THE SPECIFIC PURPOSE IN PROVIDING THIS ARTICLE IS FOR GENERAL INFORMATION ONLY. IT IS NOT INTENDED AS THE SOLE SOURCE OF FINANCIAL INFORMATION ON WHICH TO MAKE BUSINESS FINANCE DECISIONS. BUSINESS OWNERS WHO REQUIRE ADVICE OR GUIDANCE AROUND THEIR SPECIFIC FINANCIAL CIRCUMSTANCES ARE RECOMMENDED TO CONSULT WITH AN ADVISOR OR ACCOUNTANT. NO LIABILITY IS ACCEPTED IN REGARD TO ANY MISREPRESENTATIONS OR ANY ERRORS RE ANY DATA, SPECIFICS, POLICIES AND OTHER INFORMATION AS SOURCED FROM OTHERS.