Reserve Bank issues new interest rate hike warning to Australians in recent days in Philip Lowe’s power
The Reserve Bank came close to raising rates again this month and warned that more rate hikes may be needed in the coming months.
With a warning that Australia’s economy is on track to slow more than anticipated, minutes from the July board meeting reveal that the central bank had still considered raising the cash rate by another 25 basis points in July.
The July meeting was the last before it was announced that Philip Lowe would step down as governor effective September and be succeeded by Lieutenant Governor Michele Bullock.
At the meeting, the board finally voted to keep rates stable at 4.1 percent, and the minutes of the meeting revealed that the full effect of aggressive monetary policy over the previous 14 months had not yet been fully observed.
The Reserve Bank of Australia issued a new interest rate warning for Australians in the final days of the Philip Lowe government.
The board also recognized that inflation was declining; and that slowing economic growth was working to further align supply and demand, which “would, over time, help reduce inflation.”
The bank warned that the economy could slow more than expected, with members noting that there was “considerable uncertainty” about the resilience of household consumption and that the “squeeze” of many household finances could further slow consumption. .
Ultimately, the board considered the case for holding the cash rate stable to be “the strongest.”
“Given both the uncertainty surrounding the outlook and the significant increase in interest rates to date, members agreed to hold the cash rate stable and reassess the situation at the August meeting,” the minutes read.
“Members agreed that further monetary policy tightening might be necessary to bring inflation back to target within a reasonable time frame, but that this depended on how the economy and inflation evolve.”