The Reserve Bank has decided to maintain the current interest rate at 4.35 percent. Despite holding rates steady, the Bank's Chief has indicated that it is premature to claim success in the fight against inflation. She emphasised that the possibility of a future rate hike remains open, suggesting that the economic battle against rising prices is far from over.
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TVTranscript
00:00On alert, but not alarmed.
00:05Things are pretty bumpy.
00:07In the face of uncertain times, the RBA Governor looked relaxed.
00:11We believe we have rates at the right level to return inflation to the target range next year.
00:16The cash rate has been left on hold at 4.35% since November.
00:21Given the stickiest elements of inflation are essential services
00:25and demand for discretionary goods and services is already slumping,
00:29will any future rate hikes really be affected?
00:33It's a good question.
00:34If other parts of the economy are resulting in inflation which is much higher,
00:41then we do need, it's the only tool we've got,
00:44but we do need to think about using interest rates to impact the parts the economy can impact.
00:49Some economists believe the Central Bank missed an opportunity.
00:53To hit the Reserve Bank's targets, you would think they would need to increase
00:57to get inflation back to 2.5% quicker than they're expecting.
01:02I don't think that further interest rate rises from here would actually help to soften inflation.
01:08The Reserve Bank admits household spending has fallen off a cliff.
01:12What we are really trying to do is slow things enough to bring inflation down
01:17without tipping the economy into recession.
01:19The Treasurer had hoped to focus on spending in the budget to kick-start growth,
01:23but strong inflation has changed that.
01:25The Government needs to be running fiscal policy that's not adding to inflation.
01:30The Reserve Bank thinks it has interest rates at the right level,
01:33but they might stay there for longer than expected.
01:36Experts say homeowners should take advantage of the intense competition between banks
01:41to hunt around for a better deal.
01:43There are 30 different lenders on our database
01:47that are still advertising at least one variable rate under 6%.
01:51Switching now to save in the long run.
01:55Transcription by CastingWords