Equipment finance rates for new fixed rate loans and for existing variable rate commercial loans may increase as a result of the September RBA rate increase. The decision by the Monetary Policy Board of the Reserve Bank (RBA) to increase the cash rate in September was highly expected. The rate rise of 25 basis points was the fourth hike for the year and places the cash rate at 4.6%. This is the highest level in 15 years.
Businesses considering upgrading machinery and equipment may be questioning their acquisition plans. They may be wondering if rates will go even higher, when they may go down, and how the cash rate rise affects the loans they require?
The RBA Board does not pre-empt, predict or even give the slightest of indications for future decisions. Cash rate decisions are made based on the data available at the time of the meeting. It is up to those planning to take on finance to understand the factors that led to the decision and what could play out to assist in making their own decisions. We provide some of the key points around the latest decision to assist operators with their asset acquisition planning.
September RBA Rate Increase – Key Points
Australia’s high rate of inflation is the focus of monetary policy and RBA cash rate decisions. The day after the cash rate decision, the Australian Bureau of Statistics released the August Consumer Price Index (inflation data) with a further rise from 3.5% to 4%. Figures that the RBA Board did not have before their meeting.
Keeping across the reasons for the high inflation rate may provide insights into what may happen with interest rates. The two key categories identified by the ABS were transport with high fuel prices and housing with higher construction costs.
In explaining the September Monetary Policy decision, RBA Governor Michele Bullock said the key reasons were the continuing high rate of inflation, the boom in AI, and that risks identified in August were starting to materialise, specifically that the Iran war was continuing for longer than expected. While Australia’s inflation rate started climbing in 2025, the situation in the Middle East has simply made it worse.
As this conflict continues, prices for fuel globally continue to be high. These high costs impact many sectors especially transport costs which then flow through to agricultural produce and many consumer goods. Ms Bullock explained that AI was impacting inflation with the boom in data centre construction affecting the building sector and rises in the price of software and technology products.
Ms Bullock said that monetary policy – cash rate adjustments, were the only available tool to the central bank to address the rate of inflation, stressing that rate rises have been proven to reduce the rate of inflation though the mechanisms in how this works are not always clearly obvious to many people.
What’s next? Ms Bullock has made it clear that the Board will lift rates again if necessary. The RBA Monetary Policy Board next meets to deliver the cash rate decision on November 3. That decision may be based on progress with ending the Iran war and how inflation is tracking. The ABS is due to deliver the next inflation data – the September figures, on 28 October.
RBA Impacts on Equipment Finance Rates
The impact of RBA decisions on equipment loan rates can vary across the commercial credit market. The cash rate as set by the Reserve Bank is applied to overnight loans between banks and lenders. Lenders are not obliged to follow the Bank’s decision. They may make their own decision to set their rates on different credit products and in different markets, using the cash rate as a base starting point.
Lenders can move early and change their rates if their analysts strongly forecast an increase coming from the RBA. When a change to the cash rate is announced, some lenders may pass on the full amount of any rise or cut. Others may choose to remain more competitive and not lift their rates by the full amount. This market is competitive and competitive rates can be found.
Existing asset loans which have been arranged with a fixed interest rate will not be impacted by the latest rate rise. Chattel Mortgage, Lease, Commercial typically have a fixed rate which remains unchanged over the full fixed term.
Other commercial loans such as Unsecured Business Loans and Overdrafts, taken out to pay for repairs and servicing and other business expenses may have a variable interest rate. These credit products are susceptible to changes in the rate market.
Business operators applying for new machinery and equipment finance are likely to see an increase in rates across the market. To cover off on all available opportunities, business owners can use our expert broker services to access a vast lender panel including specialist non-bank lenders operating in their industry.
Review our latest rates as a guide and request an equipment finance rates quote to assist with your acquisition planning.
For competitive equipment finance rates following the latest RBA rate increase connect with Jade Equipment Finance 1300 000 003.
DISCLAIMER: IF MISINTERPRETATIONS, MISREPRESENTATION OR ERRORS EXIST IN THIS ARTICLE, NO LIABILITY IS ACCEPTED. THE INFORMATION IS PROVIDED ONLY FOR GENERAL PURPOSES AND NOT IN ANY MANNER INTENDED AS THE ONLY SOURCE FOR MAKING FINANCIAL DECISIONS. THOSE THAT CONSIDER THEY REQUIRE ADDITIONAL GUIDANCE OR ADVICE SHOULD REFER TO AN INDEPENDENT FINANCIAL ADVISOR.
