After the news yesterday of another rate rise, we take a close look at what the RBA has to say. Press Release by Michele Bullock, Governor: Monetary Policy Decision 7 NOV, 2023
- Yesterday, RBA announced cash rate increase to 4.35%
- The Board held interest rates steady since June following an increase of 4 percentage points since May last year.
- It had judged that higher interest rates were working to establish a more sustainable balance between supply and demand in the economy.
- Inflation in Australia has passed its peak but is still too high & the risk of inflation remaining higher for longer has increased.
- Labour market conditions have eased but they remain tight. Housing prices are continuing to rise across the country.
- The latest reading on CPI inflation indicates that while goods price inflation has eased further, the prices of many services are continuing to rise briskly.
- Given that the economy is forecast to grow below trend, employment is expected to grow slower than the labour force and the unemployment rate is expected to rise gradually to around 4¼%.
- Wages growth has picked up over the pastyear but is still consistent with the inflation target, provided that productivity growth picks up.
- Still significant uncertainties around the outlook. Services price inflation has been surprisingly persistent overseas & the same could occur in Australia.
- Outlook for household consumption also remains uncertain, with many households experiencing a painful squeeze on finances, while some are benefiting from rising housing prices, substantial savings buffers & higher interest income.
- Whether further tightening of monetary policy is required to ensure that inflation returns to target in a reasonable timeframe will depend upon the data & the evolving assessment of risks (including global markets).
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For more information from this press release: https://lnkd.in/gGJaF3UD