The Reserve Bank has announced the official cash rate during its September meeting
The Reserve Bank of Australia has kept the cash rate on hold at 0.1% for September. This move was widely predicted by analysts despite a 97% market expectation it would drop to zero percent on the ASX’s RBA Rate Tracker.
According to CreditorWatch chief economist Harley Dale, the RBA won’t likely be changing the cash rate for quite some time.
“We now face nine consecutive months where the Official Cash Rate (OCR) has been at an all-time low of 0.1 per cent,” he said. “The Board of the RBA won’t be altering that situation for a substantial time against the background of the seemingly endless lockdowns.
“As the duration of lockdowns increases so does business uncertainty - this is the biggest enemy we confront through the remainder of 2021. Complementary RBA policies to maintain downward pressure on borrowing costs will also persist. This is vital to businesses, especially small and medium-sized enterprises (SMEs) which are disproportionately affected by the current economic conditions.”
At some point, businesses will need to think strategically in order to leverage the opportunities presented when economic conditions start to recover, he added.
“That seems a long way off right now, but it will happen, and businesses will do well to be prepared,” he said.
For now, however, defaults are rising while credit enquiries are falling as the nation’s two largest economies of Sydney and Melbourne remain in lockdown.
“As a key indicator of business conditions, this metric highlights the challenges SMEs will face through the remainder of 2021,” said Dale.
