RBA interest rates widely expected to be left on hold at 4.35pc in June meeting
The Reserve Bank is certain to keep interest rates on hold on Tuesday, economists say, keeping borrowers hoping for any mortgage reprieve on tenterhooks for another six weeks.
The RBA has not budged on rates since November last year, when it hiked to 4.35 per cent, citing ongoing concern about economic uncertainty. Governor Michele Bullock has repeatedly stated the bank is not ruling anything in or out, and will hike rates again should the data show it’s needed.
Treasurer Jim Chalmers said though the Government did not “predict or pre-empt decisions taken by the independent Reserve Bank”, the impact of rates rising so quickly, from 0.1 per cent in May 2022, was clear.
Sign up to The Nightly's newsletters.
Get the first look at the digital newspaper, curated daily stories and breaking headlines delivered to your inbox.
By continuing you agree to our Terms and Privacy Policy.“The economy is slowing as a result of higher interest rates, which are already hammering consumption growth,” he said. “The Budget forecast consumption to grow by only 0.25 per cent this year – when it usually grows around 2.5 per cent.
“By the time the (RBA) board meets this week, interest rates will have been on hold for almost eight months.”
A Bloomberg survey of 32 economists was unanimous in expecting rates to stay on hold this month. Three of the big four bank economists expect a rate cut in November, while others at smaller lenders, like Bendigo and Adelaide Bank, and at specialist lenders UBS and HSBC expect rates will not be cut until early next year.
Ms Bullock will elaborate further on the board’s considerations at a media conference on Tuesday afternoon.
The Treasurer said the Federal Government was “focused on our job”.
“(That’s) helping people under pressure with responsible cost of living relief, fighting inflation and getting the budget in better nick without smashing an already weak economy,” he said.
Dr Chalmers cited Treasury estimates that the Budget’s cost-of-living policies would directly push inflation down by 0.75 of a percentage point in the 2023-24 financial year and 0.5 of a percentage point next financial year.
The next key data points for the RBA to consider ahead of its August 5-6 meeting are quarterly inflation figures, due July 31, as well as the monthly unemployment update on July 18.
