It's not the news borrowers want to hear but there was no relief on offer from the Reserve Bank today with interest rates kept on hold. Despite central banks to cutting rates overseas the governor here says she's not ready to move just yet and is not satisfied inflation is on target to come down further.
Category
📺
TVTranscript
00:00Whatever it takes. That was today's message from the RBA Governor Michelle Bullock who
00:07left rates on a hawkish hold.
00:09Inflation is still above central bank targets in many economies and it is proving to be
00:13sticky.
00:14Governor, you recently said that Australia remains on the narrow path of lowering inflation
00:20without a recession. If you had to hike rates again, does that risk knocking us off that
00:25path?
00:26A narrow path point is about trying not to knock us off that so that there aren't those
00:32inflationary pressures in the economy.
00:34Today's decision came as no surprise to economists.
00:37I think the RBA probably should have increased rates a little bit further, probably closer
00:41to around 5%.
00:43We think by year end it will be very clear that we are tracking back towards that 2-3%
00:48target range.
00:49It's not unusual for the Reserve Bank Board to leave its options open, but when it comes
00:55to a future interest rate hike, that is not what the market is currently expecting.
01:01While the Governor conceded higher for longer rates are hurting the economy, she said fears
01:05of a recession are unfounded.
01:08They've got jobs and I think that's really important for the future.
01:13We have an unemployment rate around 4%. If we were in a recession it would be jumping
01:16by 1-2 percentage points.
01:18While the RBA didn't pull the trigger on a 14th rate hike, the Governor said the Board
01:23did consider it.
01:25She acknowledged the pain of high interest rates is being felt unevenly across the economy,
01:30with some households bearing the brunt.
01:33The big question for borrowers is when interest rates will start to come down.
01:37We think we'll see an easing cycle running at about a quarter percentage point a quarter,
01:42so four cuts following a November cut as well.
01:45I think realistically it could even be as late as the middle of next year if we get
01:50a couple of quarters of inflation being relatively sticky.
01:54A critical few months ahead.