As was expected, the RBA lifted interest rates a further 0.25% on 7 March meeting, said more increases likely but also indicated a pause was closer. The RBA Governor, Dr Philip Lowe made the ‘pause’ comments in a speech at the Australian Financial Review Business Summit, held the day after the RBA Board meeting. The content of that speech is informative as it expands on comments in the monetary policy statement and covers more ground. Comments and ‘ground’ which may be of assistance to business owners in the midst of making those vital acquisition decisions in the lead-up to the end of the financial year. Having as much intel as possible as to what may lay ahead in business conditions may provide be vital to those finance decisions. Interest rates are critical to commercial loans and with rates set to move higher, using an experienced broker to secure the cheapest rates can be an astute decision. The current cash rate is 3.6% and some markets and analysts still expect that to climb to 4.1%. The messaging from the RBA in the March statement, followed with Dr Lowe’s speech, may be interpreted in a number of ways. The further tightening of monetary policy as mentioned may mean at the next meeting, it may mean one further rise or several. The reference to getting closer to the point where the RBA would deem it appropriate to pause rate hikes is also open to a number of possible interpretations. Will that point be by the next meeting or beyond? Will the pause come before or after further tightening? Further information will be revealed when the Minutes of the 7 March RBA Board meeting are available on 21 March. These provide more detail on exactly what was discussed especially in regard to the options considered for interest rates. We’ve isolated a number of the most relevant points to interest rates as an overview and the complete documents can be easily accessed at the bank’s website. Monetary Policy Statement – Overview Key points from 7 March Board meeting:-

• Rise of 25 basis points for cash rate.
• Moderating of global inflation is being recorded but it will take a while for the rates to drop to the targets of individual countries.
• Inflation rate domestically seems to have reached the peak during the quarter ending December 2022. This is based on the CPI data for December and January as released by the Australian Bureau of Statistics.
• The Board expects prices for goods to moderate due to demand weakening and due to global developments. Prices for services are still at very high levels, especially rents.
• The Board’s forecast is that this year and next year will see inflation fall but not start nearing the top end of the target range, 3% until mid the following year.
• The December quarter revealed as slowing in the rate of economic growth with 0.5% recorded for the quarter and annual GDP growth 2.7%.
• The home construction sector was especially noted for the weakening in demand. This is seen as a result of higher interest rates.
• The outlook for business investment remains positive.
• The tight labour market conditions remain but with an easing based on the most recent data.
• A prices-wages spiral has been a major concern for the RBA. It is remaining extremely alert to the pricing behaviour of firms and the costs of labour. But in the March statement, the Board rated the risk of a spiral as low.
• Uncertainty was the theme of the February statement and is mentioned again in March. This is in regard to the extent and at what speed the Australia’s inflation rate falls as a result of consumer spending reacting to higher interest rates.
• The statement concludes with saying that more rises are likely.

Speech by Philip Lowe The 8 March speech by Dr Lowe focussed on inflation, economic conditions as well as monetary policy and delved deeply into many facets and explanations for various sectors of the economy. Reading the transcript may be of interest to many business owners. While the speech covered a lot of ground, in regard to interest rates the stand-out comments may be seen as:-

• Interest rates being the tool the RBA has to have an effect on inflation.
• Rates are now in ‘restrictive territory’.
• The situation is closer to the point where a pause in rate rises would be appropriate.

It will be interesting to see what transpires at the April meeting – pause or hike? Commercial Finance Interest Rates We would expect rises in commercial finance rates in general terms, but the when and by what amount the rate rise is passed on will vary across our lender panel. Having access to more lenders enables us to secure the cheapest available interest rates with finance suited to individual customers. With at least one more rise looking quite certain at some time in the coming months, securing finance at the current rates and finalising acquisitions now, could represent a handy saving over the finance term. To discuss securing cheaper interest rates on commercial finance contact Business Finance 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.