Michele Bullock Presides Over Fourth-Straight Month of Unchanged Interest Rates at 4.1%: RBA Decision

The Reserve Bank left the policy rate unchanged at 4.1 percent for the fourth consecutive month, but did not rule out future hikes to bring inflation back to its target.

This is the fifth time the RBA has suspended its current rate hike cycle since May 2022, when it began raising rates to reduce high inflation, and left the money rate at its highest level since April 2012.

Tuesday’s board meeting was the first under new Gov. Michele Bullock, who took over from Philip Lowe last month.

The RBA’s decision to leave rates unchanged was in line with the expectations of financial markets and economists, despite a slight rise in inflation to 5.2 percent in August, from 4.9 percent in July.

It was the first time monthly inflation had increased since April, due to a rise in fuel prices contributing to higher transport costs, as well as rising prices for housing, food and insurance. . Core inflation, however, fell further.

In her first statement as RBA governor, Ms Bullock repeated Mr Lowe’s earlier statements that future rate rises may be needed to combat inflation.

“Raising interest rates are helping to establish a more sustainable balance between supply and demand in the economy and will continue to do so,” Ms Bullock said.

“In light of this and the uncertainty surrounding the economic outlook, the Council has again decided to keep interest rates stable this month. This will give more time to assess the impact of the interest rate hike to date and the economic outlook.

Ms Bullock said the RBA expected inflation to return to its target range of 2 to 3 per cent “by the end of 2025”, but noted that rising fuel prices and rents could s prove difficult.

“Current inflation indicators suggest that goods price inflation has eased further, but prices for many services continue to rise rapidly and fuel prices have risen noticeably recently. Rent inflation also remains high,” she said.

“Inflation is falling, the labor market remains strong and the economy is operating at a high level of capacity utilization, although growth has slowed.”

Economist Chris Richardson said he expected Ms Bullock to adopt a “hawkish” tone – suggesting future rate hikes are possible to curb inflation – in her first post-meeting statement in as governor.

“The more hawkish the Reserve Bank is, the less likely it is… (to have to) do something hawkish,” he told The Business.

“They want to make sure that we don’t get carried away, if you will, by the pause that has been going on for several months now.”

Mr Richardson said he hoped the RBA would not increase the policy rate at all in the coming months.

“I’m still hopeful that there won’t be any changes,” he said.

This follows internal RBA emails released under a Freedom of Information request which showed the National Debt Helpline was receiving more calls from people who had never experienced financial difficulty before – even those who were “gainfully employed” or “mortgaged with six-figure salaries.” ” living in Sydney’s wealthiest suburb.

“It’s still not enough”

Another month of stable interest rates is little comfort to thousands of borrowers already struggling with higher repayments, including Jalal Ahmed.

After emigrating from Bangladesh in 2015 with his partner and son and renting for years, the family decided to build their first home in suburban Melbourne.

They have lived there since 2018 but, after welcoming a second son two years ago, the family began looking for a bigger home for their growing family – encouraged by the former RBA governor’s now-infamous predictions, Philip Lowe, according to which interest rates would not increase until 2024.