FOR the sixth consecutive meeting, the Reserve Bank of Australia (RBA) has held the cash rate steady at 4.35 per cent.
Market commentators had largely predicted this, particularly following the latest quarterly consumer price index results which showed an increase of 3.8 per cent in the June quarter, according to the Australian Bureau of Statistics.
Although this is up when compared to the 3.6 per cent increase in the March quarter, the result aligns with the RBA’s forecasts.
Recently, RBA governor Michele Bullock said the economy was in a difficult place where demand was still too high. She said the RBA was balancing the fact that demand was still too strong with the fact that monetary policy acts with a lag.
As a result, she said the economy was at a difficult point and the RBA would remain vigilant.
Ms Bullock said predictions of “near-term” rate cuts were overblown.
“So based on what I know today and what the board knows today, what we can say is that a near-term reduction in the cash rate doesn’t align with the board’s current thinking,” she said.
“I understand that this is not what people want to hear. I know there are many households and small businesses that are struggling with interest rates where they are.
“But really, the best thing we can do, and I’ve said this before, the best thing we can do is to bring inflation back down to target because we can’t let inflation get away.”
Although headline inflation is projected to return to the RBA’s 2-3 per cent target range by early next year – the first time since early 2020 – underlying inflation is not anticipated to reach this target until Christmas 2025.
Ms Bullock said if underlying inflation was not falling sufficiently quickly by the middle of next year, then the bank would have to make “some very difficult decisions”.
News followers online had a lot of mixed reactions across the board, with one saying: “It’s a great breather if honest, no sensible person wants their costs increased. From what I’ve picked up, it’s nothing to do with our government policies”
Another commented: “My adult children are all stressed to the max with these interest rates and cost of living. Quality of life is much diminished. What is all this achieving? Absolutely nothing.”
Many mortgage brokers strongly advise that if you’re feeling uncertain or overwhelmed by your mortgage situation, reach out and have a conversation.
To read the full media statement, see the RBA official website .
