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Interest Rates Recap March 2024

Repeated cash rate hikes by the Reserve Bank of Australia (RBA) have left Australians weary and desperate for change. And while a rate cut is not on the cards just yet, the news that it remains unchanged for now is a big relief for mortgage payers. This is your interest rates recap for March 2024.

Key Points

Market Overview

Countless cash rate hikes in Australia since 2022 have seen all loan interest rates soar, including home loan interest rates. This makes keeping up with mortgage payments more challenging. Little wonder then, that property owners were anxious to hear the outcome of the RBA’s monthly board meeting in March.

Financial institutions are at liberty to set their own interest rates but typically align their rates with the RBA’s cash rate target. This affects everyone but in different ways. Higher interest rates mean you pay more on loans but earn higher returns on savings.

Australians already battling to pay off loans were eagerly awaiting a rate cut announcement. The RBA announced after its March board meeting that as inflation remains high, it is holding the cash rate at its current 4.35%.

Relevant News

The decline in global growth and high inflation have been top priorities on the agenda for international organizations. The IMF forecast earlier this year for 2024–25 was below the historical average of 3.8%. Banks have accordingly kept rates high to fight inflation. 

As with its December 2023 and February 2024 board meetings (they do not meet on this issue in January), the cash rate was unchanged for March 2024. Since the last increase in November 2023, when it was raised by +0.25 percentage points, the cash rate has been 4.35%. 

The RBA has an annual inflation goal of 2-3%. RBA governor Michele Bullock stated that their forecasts show inflation potentially coming back into the desired range by 2025. They need to be “confident” that inflation is moving into their target band before considering a rate cut.

Conclusion

In the past two years, Australians were dealt severe blows by the RBA in a bid to curb growing inflation. The RBA’s long line of cash rate hikes may have ended but when will rates be cut? Opinion is divided, but with the cash rate unchanged in March, only time will tell.

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