Interest Rate Outlook
As widely predicted, the RBA raised rates to 3.6% in March. Whilst the consensus was rates would now go higher for longer there were a number of significant events that took place during March. Most notable being the bank failures of Silicon Valley Bank and Credit Suisse. This saw the Federal Reserve step in, to sure up deposits and attempt to quell the widespread contagion in the banking sector. This has led to an even split in thinking that rates either continue their path upwards or stay on hold for April and the peak may be lower than previously thought.
The RBA concurred with this and did not raise rates on April 4. This leaves the cash rate at 3.6%.
There is no clear path ahead with some data pointing to lower inflation but other data points showing it may be harder to drop than previously thought.
The monthly CPI annual movement for February slowed to 6.8% from 7.4% in January and 8.4% in December. It is also lower than the expected figures which would again suggest interest rates are working to slow inflation.
Whilst on the surface it appears to be working there are competing factors at play with a recent decision by OPEC to cut oil production which will have upwards pressure on rates. There are also energy price increases and wage growth pressures which are yet to filter through and may have an upward impact on inflation.
Other notable items
- Banking crisis appears to have been sidelined for now
- Some pockets of Australian housing appear to have picked up as per Corelogic reports
- Porter Davis enters administration leaving 1,700 property owners in limbo
Upcoming Lodgement Dates for April:
- 28 April – Make superannuation guarantee payments
- 28 April – Lodge and pay BAS for those not lodging electronically (four week automatic extension when lodging electronically or through an agent)