Rates up another 0.25 bps
The Reserve Bank Board has lifted interest rates by a further 25 basis points.
The board said it had lifted rates to address continuing inflationary concerns.
The Board decided to increase the cash rate target by 25 basis points to 3.60% It also increased the interest rate on Exchange Settlement balances by 25 basis points to 3.50 per cent.
It said global inflation remains very high. In headline terms it is moderating, although services price inflation remains elevated in many economies. It will be some time before inflation is back to target rates. The outlook for the global economy remains subdued, with below average growth expected this year and next.
The Board also flagged there will be “further tightening of monetary policy” needed to return inflation target.
“In assessing when and how much further interest rates need to increase, the Board will be paying close attention to developments in the global economy, trends in household spending and the outlook for inflation and the labour market. The Board remains resolute in its determination to return inflation to target and will do what is necessary to achieve that.
“Wages growth is continuing to pick up in response to the tight labour market and higher inflation. At the aggregate level, wages growth is still consistent with the inflation target and recent data suggest a lower risk of a cycle in which prices and wages chase one another. The Board, however, remains alert to the risk of a prices-wages spiral, given the limited spare capacity in the economy and the historically low rate of unemployment. Accordingly, it will continue to pay close attention to both the evolution of labour costs and the price-setting behaviour of firms.”
I’ll bet Lowey’s RBA overshoots on the upside with pushing rates too high for too long = Recession we don’t have to have.
Exactly as Lowey overshot on the low side keeping rates too low, for too long and flagging too many times rates would not increase until 2024.
So much for a steady hand at the wheel hey Lowey : – /
Lowey and the RBA board are more like a bunch of drunk P plate hooligans in a turbo charged V8, lurching from pedal to the metal and screaming out the window for keeping the pedal to the metal until 2024.
Then suddenly having to stomp on the breaks, rip up the hand brake, throw out the parachute and the anchor in 2022 and now 2023.
Mind you most Central banks seem just as hopelessly drunk.
Another rate hike to punish the already struggling middle class and the most vulnerable Australians who may be at the mercy of a landlord.
The poor get poorer while the rich receive higher interest rates on their conservative savings and higher rental income on their properties. Their spending patterns remain unchanged, or increased. And so the majority of Australians with mortgages and rent to pay, and whose spending patterns are already impacted / inhibited by high costs of items brought about by inflation and energy prices are further punished for the spending there unable to do. You see, the wealthier Australians have no mortgages and can continue their spending…and the RBA see’s this and exclaims “They’re still spending it up big…lets raise interest rates again…”
But here’s the lesson Mr Lowe, your interest rate hikes are doing NOTHING to impact those who can still spend since they have no mortgages that YOU can impact. You’re simply destroying families who will shortly lose their homes.
Oh, and the solution was simple…
Tax rates could have made this fairer whole process fairer and avoided the mortgage stress while also serving as a buffer for the poorer Australians to get through the high inflation without also having to face rent and mortgage increases…Tax relief for the lower earner, higher taxes for the high earner…The wealthy would have had less to spend for a short time period until the inflation was under control.
Then, Mr Lowe, you could have reduced those tax rates when you needed to stimulate the economy once again again…BUT, NO THANKS TO YOU – WE will get to watch as you bumble along trying to reduce interest rates which the BANKS WILL (ONCE AGAIN) NOT always pass on…
You are a disgrace and should resign immediately…
Understand the sentiment but Lowey can’t control taxes.
Whilst it’s important for RBA independence, the problem is we often have Monetary Policy moving in opposite directions to Fiscal.
That makes both less effective.