Reserve Bank of Australia holds rates at 3.85 per cent in July, disappointing retailers and mortgage holders
From struggling retailers to squeezed mortgage holders, the Reserve Bank of Australia’s surprise call to leave interest rates on hold has left many disappointed.
Markets and economists were broadly in favour of a 25 basis point cut in July but the central bank board has decided to wait for more evidence on inflation before considering lowering the cash rate further.
Interest rates have already been cut twice this year as inflation tracks lower and the central bank’s focus switches to growth prospects and job market resilience.
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By continuing you agree to our Terms and Privacy Policy.RBA governor Michele Bullock acknowledged households with mortgages would have been “very keen” for another interest rate cut to ease budget pressure.
“’I’m also really conscious that we don’t want to end up having to fight inflation again,” she said.
The Australian Retailers Association described Tuesday’s decision as a “missed opportunity” to improve the outlook of a sector employing one-in-ten Australians.
“Weak consumer spending and high business costs continue to put pressure on retailers,” ARA chief executive Chris Rodwell said.
Real Estate Institute of Australia president Leanne Pilkington said the July call would leave borrowing costs high for first home buyers.
“We understand the RBA’s priority is returning inflation to its target band but this needs to be balanced against the risk of further dampening housing demand and locking first home buyers out of the market,” she said.
Speaking to media after the two-day cash rate meeting, Ms Bullock sympathised with young people hoping to buy but said interest rates were not the only roadblock.
“In fact, I’ve heard criticisms that we shouldn’t lower interest rates because housing prices will go up,” she said.
“So we can’t win really.”
The governor said the question of housing prices was largely for governments to address.
Further insights into the interest rate decision could be revealed in a public speech from deputy governor Andrew Hauser on Wednesday at the Australian Conference of Economists in Sydney.
