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It’s the rate that stops the nation; The Reserve Bank of Australia (RBA) has revealed its cash rate decision for November 2021.
Despite recent lending concerns, the RBA has not surprised the pundits, keeping the cash rate at its record low rate of 0.1 per cent for at least another month.
It means all eyes are on the RBA’s December decision.
According to CreditorWatch chief economist Harley Dale, “the December RBA Monetary Policy announcement will be the most important of 2021, followed by the Melbourne Cup Day update.”
“November 2nd is race day; December 7th is game day,” he quipped.
Mr Dale said there’s been tentative signs of re-emerging inflationary pressures, “albeit heavily influenced at this stage by COVID-related pressures.”
“The rapid easing in lockdown restrictions has opened pent-up demand for consumer services.Many businesses are set to go and as vaccination levels reach the critical levels required, the outlook is positive.”
But, he did warn that the future “doesn’t lack bumps”.
“We all knew we would reach this situation in the December 2021 quarter but now we are living it. Opening means considerably stronger demand and better times for Small and Medium-sized Enterprises. A key issue is that this changing economic environment is occurring within a landscape of persistent supply disruptions,” the economist flagged.
He highlighted that this backdrop could create a challenging trading environment for many SMEs – with economic recovery not set to occur in a straight line.
“It would be nice to tell a universally positive story, but that’s the nature of the pandemic,” he conceded.
All the while, the RBA is under the pump as the prospects of earlier than expected interest rate rises mount.
Mr Dale indicated that everyone is now expectant of market interest rates – even without the presence of official changes to the cash rate policy.
“As economic conditions move in a way that is sometimes evolving and sometimes revolutionising, the RBA is sticking to its record low interest rate policy, but not necessarily the timing of it,” he offered.
“On December 7th we will receive the final RBA statement until February 1st, 2022. The December statement will be a key update given the Bank will have had the opportunity to scrutinise an increasing amount of information regarding post lockdown economic outcomes.”
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