EDITORIAL: Case for fuel excise cut has weakened
Reserve Bank of Australia monetary policy meetings have attained must-watch status.
Reserve Bank of Australia monetary policy meetings have attained must-watch status.
When the RBA raises the cash rate — which means home loan interest rates will be going up, too — another layer of urgency is added to the decisions taken in countless households across the nation.
For some families it means sacrifices.
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For families battered this year by three rate rises and higher everyday costs flowing from the oil shock created by the war in the Middle East, having the RBA leave the rate on hold on Tuesday perhaps felt almost like a win.
The central bank opted to hit pause and left the cash rate unchanged at 4.35 per cent. It was the first RBA meeting since December 2025 without a rate rise, following increases in February, March and May.
But there remains caution, with April’s inflation rate of 4.2 per cent being well above the RBA’s 2-3 per cent target.
And underlying inflation, stripping out volatile price movements, was also high at 3.4 per cent.
The bank would “do what it considers necessary . . . including increasing the cash rate target further if required”, the monetary policy board said.
And RBA governor Michele Bullock made it quite clear we are not out of the woods.
“Leaving rates on hold today will allow the board to assess how these previous increases are flowing through the economy,” Ms Bullock said.
“I want to be very clear that inflation remains too high.”
But for now at least we can breath a sigh of relief.
The spotlight now turns to the Albanese Government and its decision on whether or not to extend the fuel excise cut — which slashed 26¢-a-litre off for motorists for three months — beyond June 30.
The rebate had been halved in April in a bid to tackle the impact of soaring global oil prices following the closure of the Strait of Hormuz, which cut oil supplies.
The Government has indicated it is toying with the idea of extending the excise cut.
On Monday Prime Minister Anthony Albanese said the expenditure review committee would consider the issue early next week.
On Tuesday Finance Minister Katy Gallagher said a possible extension was under “active consideration”.
“We saw the price of oil fall quite a bit yesterday, but it has been moving around a bit over the last couple of months,” Senator Gallagher said.
The Government should consider the decision very calmly and rationally. Important is the fact that — although of course not guaranteed — it would appear a deal in the Middle East is near, which would reopen the Strait of Hormuz and allow oil to flow again, easing price pressures.
So it makes sense that the argument for the fuel excise cut has weakened.
Having households paying way over the odds for milk because transport costs to take it to the supermarket shelf were through the roof mounted a case for a fuel excise cut.
That case does not retain the same urgency today.
Throwing more money at motorists just to briefly deflect attention from the Federal Government’s Budget shambles would be a false step.
