MATT MCKENZIE: Michele Bullock’s board was right to ignore markets and hold interest rates steady

The Reserve Bank has given the middle finger to analysts and financial traders by holding interest rates steady on Tuesday. Rightly so.

Millions of borrowers were left feeling disappointed after the RBA kept the cash rate unchanged at 3.85 per cent, despite widespread hopes of a cut.

That pushed back the promise of mortgage relief until at least August.

It’s understandable that homeowners feel incensed, but directing that frustration at Governor Michele Bullock and her board is misplaced.

A better target would be the so-called experts who had promised rapid-fire relief even amid the many reasons for caution.

Yes, the cost of living fight looks to be nearing an end.

But the wisest owls at the RBA know the lessons of history — inflation will bounce back with a vengeance when you take your eye off the ball.

One batch of volatile and incomplete monthly consumer price data should never be considered enough to pop the champagne corks.

Ms Bullock has made that point many times, and was at it again on Tuesday, saying the RBA would wait for a clearer picture from quarterly data at the end of the month.

The case for back-to-back cuts was always a bit light on going into this meeting.

Unemployment remains low, and the sheer panic in international markets from Donald Trump’s trade war ahead of the RBA’s last chinwag in May has dissipated somewhat.

Chalk today’s rates shock up to another case of pundits getting ahead of themselves, far too optimistic, and moving as a herd.

It isn’t the first time it has happened, either.

Only a brave analyst would have been warning of looming interest rate hikes heading into 2022 even as inflation was clearly on the way up.

Brave, but more importantly, correct.

And as interest rates ascended, too many experts misjudged just how high up the rates mountain the RBA would climb.

Betty in Balga might not be following the intricacies of consumer price data but the folks who get paid plenty of cash to do it for a living need to get better at reading the tea leaves.