RBA holds interest rates steady while awaiting the effects of earlier increases.

At its board meeting on Tuesday, the Reserve Bank gave mortgage borrowers a break by keeping interest rates the same, at least for now.

In spite of early indications that the rate increase so far is starting to weigh on consumer spending and lower inflation, the RBA decided to wait and see how the economic data plays out after ten straight rate increases.

This choice comes after interest rates have risen by a total of 312 percentage points since May of last year. The Board is aware that monetary policy takes time to take effect and that this significant increase in interest rates hasn't yet had its full impact. The Board decided to keep interest rates unchanged this month in order to give itself more time to evaluate the effects of the interest rate increase so far and the future of the economy.

Philip Lowe, the governor of the RBA, made no guarantees that interest rates wouldn't go up again.

Since many borrowers have yet to see the rate increases for February and March reflected in their minimum repayment amounts, Mr. Lowe claimed that the board had taken this into consideration when determining how interest rates would affect the economy.

In the statement he made after the meeting, he said that "the board expects that some further tightening of monetary policy may be needed to make sure that inflation returns to target."

Stuart Robert, an assistant shadow treasurer, says it was "appropriate" for the RBA to postpone the next interest rate hike.

Mr. Robert told Sky News host Sharri Markson, "They make it very clear that the path to a soft landing is very narrow and they will do whatever it takes to keep inflation under control."

Following Tuesday's decision, the RBA's cash rate target is still 3.6%, which is the highest level since May 2012.

The official interest rate is now 3.5 percentage points higher than it was during the pandemic emergency low of 0.1%.

According to RateCity, those rate hikes have already increased monthly repayments on a $500,000 principal and interest loan by almost $1,000 over the course of the loan's remaining 25 years.

After ten consecutive interest rate increases, consumer spending has slowed, and ACOSS warns that further increases in rates could worsen poverty and destitution while also further increasing unemployment. Income supports are still woefully inadequate.

According to the ACOSS Cost of Living Report, which was published last week, 68% of people receiving income assistance skip meals, and 93% of people who rent privately are experiencing rental stress as a result of the skyrocketing cost of living.

According to Cassandra Goldie, CEO of ACOSS, another increase in interest rates will cause even more people to struggle to pay for necessities.

In one of the richest countries in the world, millions of people are currently required to make horrifying decisions about which to choose: food or medicine.

"People receiving JobSeeker and related payments struggle to pay their energy bills, cannot afford to buy necessary medications or healthcare, and cannot afford to eat enough food.

"Raising interest rates once more runs the risk of increasing the unemployment rate and pushing more people further back in the employment queue.

"ACOSS agrees that inflation is a serious problem that needs to be fixed, but the government shouldn't use the ten times in a row that interest rates have been raised quickly as a blunt tool.

Instead, the government should address price increases at their root to combat inflation, she added.

On the other hand, the 30 percent of Australians who are at the whim of their landlords have no reprieve in sight, according to national housing campaign Everybody's Home, but mortgage holders may breathe easier with a pause on interest rate increases this month.

As average rents rise and the lack of affordable housing persists, renters nationwide are spending record amounts on rent.

When interest rates stabilise or begin to decline, according to spokesperson for Everybody's Home Maiy Azize, mortgage holders will benefit more than renters from the drop in housing costs.

Rents rose even as landlords benefited from historically low interest rates, she said, adding that tenants have been suffering from rising costs for years.

"We have experienced significant annual rent increases for a lot longer than we have experienced increases in interest rates. Politicians have not been forced to account for the fact that rents have increased by $6,000 in just the last three years, despite the fact that interest rates have turned into a political crisis.”, Maiy Azize said.

Maiy Azize, added Renters shouldn't have to put up with increases of this nature on a regular basis.

"With interest rates being held steady, landlords can sigh with relief. They can also deduct their losses from their taxes or pass them along to their tenants. However, there won't be any relief for renters any time soon”, Maiy Azize said.

"We need the Federal Government to build more social housing and wind back tax breaks for investors in order to make the system fairer."Maiy Azize disclosed

The Board thinks that monetary policy may need to be tightened even more to get inflation back to where it should be.

The decision to hold interest rates steady this month provides the Board with more time to assess the state of the economy and the outlook, in an environment of considerable uncertainty.

In assessing when and how much further interest rates need to increase, the Board will be paying close attention to developments in the global economy, trends in household spending and the outlook for inflation and the labour market. The Board remains resolute in its determination to return inflation to target and will do what is necessary to achieve that.

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