For riders intending to upgrade to a new motorcycle with finance in the near or medium future, the big issue is most likely going to be the cost. The cost of the bike for sure but also the cost of the motorcycle loan. The latter determined primarily by interest rates. The rates charged by consumer finance lenders, which include Secured Motorbike Loans are impacted by decisions made by the Reserve Bank of Australia (RBA).
As most Australians will be extremely well aware, the RBA Board has increased interest rates ten times since May of last year. That is at every one of their meetings. Buyers wanting some indication or direction as to what may happen with rates ahead of their purchase and loan application can read the RBA statements.
A Monetary Policy Statement is posted to the RBA website following each Board meeting to announce the cash rate decision for that month. But even more details are revealed in the Minutes of each meeting which are released a few weeks after the meeting.
There was much attention paid to one particular comment by RBA Governor Lowe following the March meeting. That was in regard to the mention of a pause in rate rises. A pause was discussed at the December meeting along with arguments for and against a larger 0.5% rise and the 0.25% increase which was decided.
The minutes of that March meeting are now available and contain more detail about the timing of that possible pause. The minutes also include extensive coverage of the economic conditions globally and domestically and the pressures that are continuing to keep inflation at high rates.
Information which may be of value to those intending to apply for a motorbike loan and wondering what rates will be at that time. We’ve extracted a few of the most relevant mentions in the minutes in this blog post.
Relevant Points – Minutes of RBA March Board Meeting
- It is difficult to gauge the underlying condition in the labour market from the increase in unemployment on the January figures as a result of the possibility of a seasonal trend. The increase may indicate a ‘turning point’ in what has been a very tight labour market. Alternatively, it may be due to seasonal effects. The February figures will provide more information in this regard.
- The Board discussed their concerns in regard to the slow growth in productivity in Australia. For the past 3 years there has not been an increase in ‘net terms’. For businesses, this means no potential to offset the increasing labour costs.
- These issues around the slow growth in productivity are relevant as the Board notes this could be a reason for inflation to continue at a high rate. High inflation is of course the reason for the interest rates increases and it may then be supposed that could mean further rises would be needed.
- Inflation is expected to ease in the March quarter when considering the CPI data for January. But the Board notes that individual monthly data can be volatile.
- The most important figures released in February in regard to the economy – unemployment, wages, GDP and inflation, were all ‘softer’ than the Board had expected. The Board discussed if this was a signal that the level of demand was actually weaker than what was previously assumed. But there were reasons for not emphasising the one period of data.
- The forecast for inflation is for it to remain over the Board’s target of 2-3% for the next two years. Based on this forecast and the fact that the current rate is too high, the Board members agreed that another rate rise – more monetary policy tightening, was required.
- The Board also observed, on consideration of the outlook for interest rates, that even further rises were likely to be required.
- The Board assessed and discussed the issues around productivity growth, the forecast for inflation and other indications and noted that interest rates had reached ‘restrictive territory’. Also noting the uncertainty in the economic outlook.
- With consideration of these outlooks, forecasts and current conditions, the Board discussed that a point would arrive when keeping the cash rate steady would be the appropriate decision. That means, pausing interest rates rises.
- With further data to become available in the upcoming period – business surveys, inflation data, unemployment figures, retail trade etc, it was noted that this would provide important information.
- The Board agreed that the arguments for holding the cash rate steady, ie no rate rise, would be discussed at the Board’s next meeting. That meeting being on Tuesday April 4.
These are just a handful of the issues discussed by the RBA Board at its March meeting. Those wishing to know more can read to full document which is posted on the RBA site.
Motorbike Finance Interest Rates – What Next?
In these RBA minutes we have discussions about holding rates steady and mentions that further increases may be required. But the timing of which will come first is not at all clear. It should of course be noted that a number of events which look like being of great significance to the Board’s April decision have emerged since that March meeting.
These are the issues impacting banks in the US and Europe and the latest unemployment data. The commentary in response to these events has many analysts anticipating a pause in rates for April. That would give buyers a reprieve from the ongoing interest rates increases, at least for a month and while the Board assesses the economic conditions. The lag between rate rises showing an impact in economic data was discussed at the meeting and is a consideration for a pause to allow the situation to be assessed.
For buyers, the issue is sourcing the cheapest rates before any possible further rises. With the RBA indicating a rate pause and possible further rises, motorcycle buyers can source cheaper interest rates on motorbike loans through Jade Bike Loans. For buyers wanting rough estimates at our Current Bike Loan Rates use our calculator or just call for a quick quote to assist with the decision-making.
Contact Jade Bike Loans at 1300 000 003 for cheaper interest rates on motorbike loans.
DISCLAIMER: IN REGARD TO ANY ERRORS OR MISREPRESENTATIONS IN THIS MATERIAL, NO LIABILITY IS ACCEPTED. THE DETAILS, CONTENT AND DATA IS 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.
