August 16th 2024.
In a recent address to parliament, RBA Governor Michele Bullock cautioned mortgage holders hoping for a break on repayments that an interest rate cut is not likely to happen anytime soon. She emphasized that the RBA board's decisions are based solely on the most current data available, and as of now, they see no need to make any changes to interest rates in the near future.
Bullock acknowledged that there may be speculation in financial markets about a possible rate cut by the end of the year, but she stressed that this is premature thinking in the eyes of the RBA board. She empathized with households and businesses who have been impacted by increasing interest rates in recent years, but she also emphasized the importance of keeping inflation in check.
While inflation may not be a top-of-mind concern for many people, Bullock reminded listeners that high inflation can have severe consequences. It decreases the purchasing power of wages, devalues savings, and disproportionately affects those on fixed or low incomes. She urged the board to take necessary steps to combat inflation and ensure a stable economy.
The RBA has held the interest rate at 4.35 percent for six consecutive months, and Bullock reaffirmed that their economic outlook remains uncertain. She stated that their central forecasts predict inflation to return to the target range by late 2025, but there is significant uncertainty surrounding these predictions, especially as they look further into the future.
Bullock also noted that while the economy has experienced weak growth, there is still a high demand for goods and services that surpasses what the Australian economy can produce. As such, she urged caution and emphasized the importance of the RBA board's actions in regulating inflation and maintaining a stable economy.
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