RBA keeps interest rates on hold – fintech leaders react

The Reserve Bank of Australia (RBA) has this month kept interest rates on hold following 10 straight increases.

Following the decision made by the RBA to leave the Cash Rate at 3.60%, there has been several comments from fintech leaders.

Brett Reynolds, Chief Investment Officer at Tiger Brokers Australia, said, “As the market expected, the RBA has left interest rates on hold. Given the significant lift in rates we’ve seen in recent months, it is not a surprise to see the board pausing to see the impact this is having.

“This does not signify an end to the increase in interest rates. I expect rates to go higher, likely to four percent. The RBA will most likely hold rates again in May, but come the middle of the year another 25 basis point rise can be expected. While the rate of inflation is easing, it is still incredibly high. The RBA will continue to seek to bring inflation under three percent.

“For our local share market, this is likely to result in indexes hitting all time highs. Our banks remain solid. April is likely to be a strong month on the ASX.

“Our interest rates remain low against other developed economies. Inflation in many other countries is also higher, resulting in central banks continuing to raise interest rates. The outlook in Australia is much brighter than many other countries,” ended the Tiger Brokers Australia CIO.

Dylan Zhang, ASX Equities Analyst at online brokerage platform, Stake, commented that a strategic pause is poised to deliver short-term relief for investors, while forecasting tech growth stocks could soon gain in popularity.

“Today’s pause comes as welcome news to investors, but it’s unlikely this will be the last hike of the cycle. Rather than signalling that the inflation fight is over, this pause buys the RBA time to assess the upcoming quarterly CPI data on April 25 and the full impact of the banking crisis in Europe and the US.

“Last week’s monthly CPI came out below expectations at 6.8%, and while inflation appears to have peaked, this is still above the target band of 2-3%. Inflation is cooling, but there’s more work needed to prevent it becoming entrenched. That said, it appears the RBA expects credit conditions to tighten due to the pressure on global banks, which could shorten the hiking cycle and lower the terminal cash rate.

“Given how the RBA’s peers in the U.S. and U.K. lifted rates in recent months, today’s move may be seen as a sign of fragility in the Australian economy, potentially leading to a weaker Australian dollar and subsequent inflationary pressure from imports and energy prices. However, Australia is particularly sensitive to rates due to a high percentage of people on variable mortgages, so hikes may have a bigger impact when compared to other markets.

“Following this announcement, investors will be watching the impact of the OPEC+ production cuts and China’s recovery, which are causing the price of oil to surge, potentially leading to higher costs across transport, food, and travel. Given the uncertainty over recent weeks, we’ve seen investors on Stake increase their allocation to passive index funds and gold ETFs. But as the pace of rate hikes appears to be slowing, it’s likely we’ll see more investors moving back into tech growth stocks.”

Peter Marshall, Mozo’s banking expert, knows how much these rate rises are hurting a majority of people.

“The increase in interest rates over the last year is a massive part of the cost of living crisis facing every Australian’, he said.

“No one is immune, this is affecting homeowners and renters alike, as landlords are facing rate hikes on their investor loans and passing on the pain’’ added Peter.

“For many the pain isn’t over, even though the RBA paused today, the rate changes are still filtering through to existing borrowers.

“So, it is worth calling your lender now to ask them what they can do on your rate, and using Mozo’s comparison site to see if you can get a better deal as a new customer at another lender.

“Mozo’s latest research shows that two thirds of borrowers either haven’t considered calling their bank about a lower rate, or didn’t realise they could haggle.

“Our advice is ‘don’t be a hostage’, in mortgages loyalty does not pay!”