Key factors in the Reserve Bankā€™s rates pause decision

RESERVE BANK PAUSES RATES

* The cash rate has risen from 0.1 per cent in April 2022 to 3.6 per cent in March.

* The Reserve Bank board decided at its April meeting to leave the cash rate on hold.

* In a statement, the board said the pause would ā€œprovide additional time to assess the impact of the increase in interest rates to date and the economic outlookā€.

* The RBA believes inflation has peaked in Australia, with goods prices inflation expected to moderate in coming months.

* The forecast is for inflation to decline this year and next, to around three per cent in mid-2025.

* The board says there is evidence that the combination of higher interest rates, cost-of-living pressures and a decline in housing prices is leading to a ā€œsubstantial slowing in household spendingā€.

* The labour market remains very tight with the jobless rate at a near 50-year low and wages growth is increasing in response.

WHATā€™S NEXT?

* The board ā€œexpects that some further tightening of monetary policy may well be needed to ensure that inflation returns to targetā€, but this will depend on ā€œdevelopments in the global economy, trends in household spending and the outlook for inflation and the labour marketā€.

* Consumer groups have urged borrowers to shop around for better rates. The cumulative 3.5 per cent increase to the cash rate over the past 10 months added $1051 to monthly repayments on a $500,000 loan over 30 years, Canstar says.

* CPA Australia has urged businesses to seek professional advice, saying: ā€œWe are facing an unpredictable environment and businesses should not assume rate rises are over.ā€

* Master Builders Australia says governments should back in the rates pause and bring inflation under control by using their budgets to boost business productivity.

WHAT THE TREASURER SAYS

* ā€œWhile todayā€™s decision will come as a relief for a lot of Australians, we know people will continue to struggle. Thatā€™s why the costs of living are the primary focus of our economic plan and the upcoming budget.ā€ ā€“ Treasurer Jim Chalmers.

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Paul Osborne
(Australian Associated Press)

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