The RBA interest rate decision for 1 April was to keep the cash rate on hold at 4.1% which was in line with the expectations of the financial markets. While there was only a slim chance of a rate cut in April, this meeting was of special interest as the first meeting of the newly installed advisory committee on monetary policy. The new group established as an outcome of the Reserve Bank Review, to make decisions on monetary policy. While separate from the Reserve Bank Board, the committee does include several Board members including the RBA Governor, Michelle Bullock.

Other issues which made this meeting of interest were the timing with the recent Federal Budget and coinciding with the Federal Election campaign where both major parties are campaigning primarily on cost of living. In addition, the meeting occurred just a day ahead of the US Administration announcing its next round of tariffs which are expected to impact Australian exports to the US.

While a ‘rate hold’ means essentially no changes to business loan rates by most lenders at least, we share some takeouts from the meeting and commentary on what may lay ahead in the current complex global economic scenario.

RBA Interest Rate Decision - Statement

At its 1 April meeting the RBA left the cash rate on hold at 4.1%. In announcing the decision, RBA Governor Michelle Bullock noted the substantial fall in inflation since the 2022 peak which is seen as higher rates working to bring demand and supply closer to balancing.

The Board is cautious about its outlook, wanting to be confident that inflation will sustainably hold at the midway point in its target band. In regard to international developments, the Governor said that monetary policy was well-place to respond if there were implications for Australia.

The Governor said that the outlook remained uncertain. While domestic demand was recovering and incomes picking up, some business sectors are still reporting weak demand, making it difficult to pass on their increases in costs through increased prices. The labour market is still tight and labour availability is still an issue for many businesses. Growth in productivity has not improved.

Uncertainties were noted in regard to household consumption growth and the lag time between monetary policy taking effect and the response for business prices and wages.  Uncertainty also was noted on the global scene. Noting that the US tariffs were impacting global confidence and that may increase if the tariff base is widened and if other countries impose retaliatory measure

The priority of the RBA Board remains to return the rate of inflation to their target and have confidence of the sustainability of the rate. There are risks and the Board’s outlook remains cautious. As always, the Board is relying on the data. 

The next RBA monetary policy decision is due on Tuesday 20 May. The decisions now happen every 6 weeks not monthly as this was another outcome from the Reserve Bank Review.

Reactions and Commentary

With the Federal Election and the looming US tariff decisions dominating media coverage, and with the rates kept on hold, it was not surprising that media coverage of the RBA announcement was less than when there is a cut or an increase. However, interesting comments were noted in the media conference which followed the Board meeting and rate decision.

These media conferences by Governor Bullock were also introduced as a recommendation of the RBA Review and can provide more information and insights into the Board’s thinking. The conference is televised on ABC24 at 3.30pm Sydney time on the day of rate announcements. They can be worth tuning in, if you have the time.

Questions were put to the Governor by media representatives at the conference. Of note was the effect of the Federal Election. Ms Bullock replied that she regularly speaks with the Federal Treasurer but has never experienced political influence.

Ms Bullock was also asked about the US tariff situation. She said that with Australian exports representing a relatively small amount of AU total exports the direct impact may be minimal. But greater issues may be experienced from how tariffs affect our major trading partners, especially China and changes to global trading patterns. 

Commentators did note that the RBA tends to wait for the quarterly inflation figures rather than basing monetary policy decisions on monthly figures. The March Quarter figures are due from the ABS on 30 April and the next monetary policy decision meeting 19-20 May.

Following the 1 April meeting, an analyst from one of the big 4 banks said the financial markets had put a 65% chance of a May interest rate cut and another cut was expected in August.  

What RBA Interest Rate Decision Means for Business Loans

Monetary policy decisions do not affect the type of commercial credit facilities available. Lenders in the commercial credit sector set their lending rates based on their own guidelines. Some may change their rates in anticipation of and ahead of a RBA decision. Some may respond after that decision. For now, lending rates on asset acquisition finance and other commercial loans remain constant and we continue to have the lender connections to secure competitive rates across our portfolio.

For competitive business loan rates following the latest RBA interest rate decision, 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