Following the surprise spike in inflation for April as reported by the Australian Bureau of Statistics (ABS) it was less of a surprise that the Reserve Bank (RBA) announced another increase for interest rates. At its 6 June meeting, the RBA lifted the cash rate by 0.25% making it the 12th increase since May 2022 and putting the cash rate, 4.1% at the highest level for 11 years.
In making the announcement, RBA Governor Dr Philip Lowe said the latest increase was for more confidence that a return to target inflation would be achieved in a reasonable time period. Dr Lowe also said that there was still a narrow pathway to achieving the objective and it could be a ’bumby’ time for the Australian economy.
While the inflation peak occurred in December, Dr Lowe said it could be a few years before the rate was in the 2-3% target range. Many may be questioning why there is so much focus on this target? Dr Lowe repeated comments made in earlier months that when high inflation extended over a long time it could damage the economy and all Australians would be impacted.
While the big picture information can put rate rises into perspective, it may not address the individual concerns for those planning motorcycle purchases with finance. Specifically, with all these interest rates rises, what is the path to getting a motorbike loan within budget
RBA June Interest Rates Announcement
The June decision by the RBA Board was to lift the cash rate by 0.25% to 4.1%.
Main points in the announcement included:-
- It will take some years for inflation to reach the target 2-3% range
- The June decision was made to give greater confidence that inflation will reach the target in a reasonable amount of time.
- High rates of inflation erode the savings of households; damage budgets; make it hard for businesses to invest and plan; and makes income inequality even worse.
- The decision is a response from the Board to data re the outlook for inflation. This data indicating that inflation in the goods prices category is slowing but in the services category it is still persisting at high levels. Labour costs are increasing but the required pick-up in productivity is not evident.
- Despite some easing, the conditions in the market for labour are still tight.
- Productivity needs to improve to be consistent with the increase in growth in wages in r response to high inflation.
- The Board remains vigilant to the potential risks of wage and price increases. How businesses set their prices along with wage rises are being closely watched.
- Uncertainty remains in the international economy and with household demand levels.
The possible necessity for further interest rates increases was flagged again. The decisions will be made based on the data. More information on what exactly was discussed at the 6 June meeting including what options were on the table in regard to interest rates will be known with release of the minutes on June 20.
The next RBA interest rates decision is due on 4 July.
Follow-up Address by Dr Lowe
Dr Lowe addressed a business summit the day after the June Board meeting and decision. The address covered the ‘narrow path’ that presented for Australia to get to the inflation target effectively. Dr Lowe detailed how important the destination of that path, the target rate for inflation was from a number of perspective.
Points to note from the address included:-
- Inflation is currently at the highest level in 30 years.
- Interest rate changes are the tool which the RBA has to control the rate of inflation.
- Use of the tool available – interest rates, has complications.
- There is evidence to indicate that higher interest rates are having an impact and the rate of inflation is dropping.
- While the rate increased in April, inflation is showing a downward trend when the volatile elements are excluded from the data.
- Data and movements that the RBA is closely watching are:- spending by households; movements in the global economic environment; how wages move in relation to productivity; and the expectations around inflation.
- The significance of expectation in regard to inflation was explained as when there is an expectation that inflation will remain high, businesses increase prices and then wage increases are expected – and that further increases prices and keeps inflation high.
- Australia could experience a bumpy time as the RBA navigates the narrow pathway to reducing the current high rate of inflation.
Getting a Motorbike Loan to Suit Budget
When the RBA increases the cash rate, the ripple effect is felt across lending markets as banks and lenders adjust their rates in line with their borrowing costs. This includes lenders in the motorbike lending market. However, there are variations in when these adjustments occur, creating an opportunity for our consultants to find the cheapest rates at any particular time. With our technology, resources, and expertise, we have access to more lenders and can handle the process quickly, ensuring you secure the most suitable Secured Finance for Motorbikes.
Buyers in need of finance can rely on us to assist them in obtaining a motorbike loan that fits within their budget. Our priority is to secure the cheapest available rate and the most suitable loan for your specific needs. While individuals can carry out this process themselves, it can be incredibly time-consuming, potentially impacting their credit profile, and they may not have access to sufficient market coverage. That's where our Bike Loan Calculator Specialists come in, leveraging their knowledge and industry connections to streamline the process for you.
While interest rates are crucial when it comes to your loan, it's equally important to consider the monthly commitments to keep your overall loan within budget. By discussing your budget with us, we can structure your loan with a term that delivers a repayment schedule realistically aligned with your current and future financial circumstances. It's worth noting that with a Secured Motorbike Loan, you have the flexibility to make additional payments and expedite the loan repayment process.
To ensure the entire loan remains within your budget, it's worth considering the requested loan amount. Reducing the loan amount can lower your monthly repayments and decrease the total interest paid. Giving thought to providing a deposit can significantly reduce the loan amount and help you achieve your budget goals.
To assist you in working out a loan structure that comfortably fits within your budget, we offer the convenience of our Loan Calculator. This tool will help you determine the most suitable repayment options and enable you to make informed decisions about your motorbike financing.
Contact Jade Bike Loans on 1300 000 003 to get a motorbike loan that works with your budget.
DISCLAIMER: IN REGARD TO ANY ERRORS OR MISREPRESENTATIONS IN THIS MATERIAL, NO LIABILITY IS ACCEPTED. THE DETAILS, CONTENT AND DATA ARE PRESENTED PURELY FOR GENERAL INFORMATIONAL PURPOSES FOR MOTORBIKE BUYERS AND THOSE SEEKING MOTORCYCLE LOANS. THIS IS NOT INTENDED AS THE SOLE SOURCE OF INFORMATION FOR FINANCIAL DECISIONS. IF SPECIFIC ADVICE IS REQUIRED AROUND FINANCIAL DECISIONS, READERS SHOULD SEEK THEIR OWN FINANCIAL ADVISOR.
