Reserve Bank Holds Cash Rate This Past Quarter-Where To now?

Reserve Bank Holds Cash Rate This Past Quarter-Where To now?

Australia's reserve bank has held the cash rate for the past quarter at 0.1% and March has been left the same as the previous 4 months.

According to the statement released Tuesday, March 2, RBA Governor Philip Lowe noted that the bank remains committed to implement various parameters in ensuring the continuity of fiscal recovery.

The RBA also noted that the overall economic recovery remained optimistic and appeared heading toward the right direction. In fact, the actual recovery rate seemed better than projected.

READ MORE: Australia Auction Market Shows Promising Record-breaking Response

Apart from the government-led fiscal stimulus package, the optimistic employment rate and a staggering decline of the unemployment rate of 6.4 per cent helped push for a faster economic recovery.

According to the RBA release, economic activities abroad, especially on the bond market contributed to the booming economic climate in the country.

“While the path ahead is likely to remain bumpy and uneven, there are better prospects for a sustained recovery than there were a few months ago. Global trade has picked up and commodity prices have increased over recent months,” the statement reads.

Ultimately, the bullish economy is expected to take its current course unless an extraordinary event will happen on top of the pandemic.

My own view is that a number of factors are making the reserve bank particularly nervous. one is that money traders have been buying dollars and increasingly putting pressure on the Reserve Bank's ability to hold back growth or prevent recession.

Many trillions of dollars have passed hands recently and there is concern that this trend may continue. I guess we could all be in for a bumpy ride until some of these s are resolved.


Darin Hindmarsh is the founder and CEO of Intellichoice Finance, a broking firm based in Brisbane. He's been providing financial and broking services in the past 18 years. Hindmarsh is also finalist in the 2020 Australian Mortgage Awards - Pepper Money Broker of the Year – Specialist Lending.