The Reserve Bank is wary of cutting interest rates until it has gathered more evidence that inflation remains on a path back towards the 2.5% target the RBA governor, Michele Bullock, says as she defended the central bank\u2019s slow and steady approach to monetary policy.<\/p>\n
In a speech to the Anika Foundation in Sydney, Bullock also said the RBA was not targeting \u201ca certain unemployment rate or number of job losses\u201d in its pursuit of low and stable inflation.<\/p>\n
Unions have harshly criticised the RBA\u2019s reluctance to cut interest rates despite inflation dropping well below 3%, saying the surprise decision on 8 July<\/a> to not offer further mortgage relief had been a \u201cblow to workers\u201d.<\/p>\n Sign up: AU Breaking News email<\/a><\/p>\n The treasurer, Jim Chalmers, has been more circumspect but still noted that \u201cmillions of Australians\u201d would have been disappointed by the outcome.<\/p>\n Bullock said the central bank had not intended to shock households by holding out on cuts and was not aiming to surprise markets, which are again predicting a rate cut on 12 August after the next policy board meeting.<\/p>\n \u201cI wouldn\u2019t say that we\u2019re looking to be unpredictable in our future,\u201d she told reporters. \u201cWe\u2019re just looking to do what we think is the right thing.\u201d<\/p>\n The governor in her speech defended the bank\u2019s record and its cautious approach, saying price pressures have been largely brought under control over the past two-and-a-half years without the significant rise in unemployment that has typically been the price of taming inflation.<\/p>\n The key jobless measure ticked up to 4.3% in June, but has held largely steady at 4-4.1% over the preceding 18 months. Inflation is at 2.4%.<\/p>\n Bullock told reporters the board would have held interest rates steady even if it knew the June jobs data would show an uptick, and did not expect unemployment to rise much further.<\/p>\n Instead of job losses, the labour market has adjusted via Australians working fewer hours, voluntary job switching, and a drop in job vacancies, she said in her speech.<\/p>\n \u201cHaving your hours cut is tough, but it\u2019s often preferable to losing a job altogether. And it\u2019s worth noting that some of this decline in hours has been voluntary, especially over the past year or so.\u201d<\/p>\n While it\u2019s clear the RBA believes it will lower rates further this year<\/a>, Bullock said the bank believed there was \u201cstill some tightness in the labour market\u201d, and that the monetary policy board had become more concerned that consumer price growth was not falling as quickly as expected.<\/p>\n skip past newsletter promotion<\/a><\/p>\n Sign up to Breaking News Australia<\/p>\n Get the most important news as it breaks<\/p>\n Privacy Notice: <\/strong>Newsletters may contain info about charities, online ads, and content funded by outside parties. For more information see our Privacy Policy<\/a>. We use Google reCaptcha to protect our website and the Google Privacy Policy<\/a> and Terms of Service<\/a> apply.<\/p>\n after newsletter promotion<\/p>\n \u201cWe still think it (the consumer price data) will show inflation declining slowly towards 2.5%, but we are looking for data to support this expectation.\u201d<\/p>\n Bullock said the bank\u2019s focus on keeping as many of the post-pandemic employment gains led to the board\u2019s decision to raise rates more slowly than in other countries.<\/p>\n The flip side was that interest rates in Australia did not rise as high as they did in some other economies, and \u201cso we may not need to lower them as much on the way down\u201d.<\/p>\n This lingering concern over inflation contributed to the monetary policy board\u2019s surprise decision to hold the cash rate at 3.85% after its last meeting \u2013 although the decision had not been unanimous, after three of the nine board members voted in favour of a cut.<\/p>\n Confirmation that price pressures are still easing are expected to come as soon as next Wednesday with the release of the inflation report for the June quarter.<\/p>\n","protected":false},"excerpt":{"rendered":"The Reserve Bank is wary of cutting interest rates until it has gathered more evidence that inflation remains…\n","protected":false},"author":2,"featured_media":287193,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3090],"tags":[51,1700,16,15],"class_list":{"0":"post-287192","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-economy","8":"tag-business","9":"tag-economy","10":"tag-uk","11":"tag-united-kingdom"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@uk\/114906747690254631","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/287192","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/comments?post=287192"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/287192\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media\/287193"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media?parent=287192"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/categories?post=287192"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/tags?post=287192"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}