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The outlook on interest rates remains uncertain, the RBA governor has said.
As the Reserve Bank of Australia (RBA) made the decision to keep interest rates unchanged at 4.35 per cent yesterday (19 March), RBA governor Michele Bullock further highlighted the board’s uncertain outlook.
“We’re uncertain, we don’t know,” Bullock said during the monetary policy decision media conference when asked about if the board has taken on a neutral bias.
Bullock instead explained that the board is responding to emerging data in real time and that there are “risks on both sides of this and the risks are finely balanced”.
“On one hand, on the upside, we still have inflation above target ... services inflation is still elevated and that’s proving difficult to get down,” she said.
On the downside, Bullock acknowledged that the RBA is aware of slowing consumption and that there are signs in the unemployment rate that “some of the tightness in the labour market is easing”.
When asked if the RBA has abandoned its hiking bias, Bullock responded: “We’re not confident enough to say we can rule out further interest rate changes, but we do think that we are on the path to get ourselves back to inflation in target within our forecast period.”
In terms of rate cuts, Bullock rehashed her stance from the previous month, stating that the RBA needs to be “much more confident that inflation is coming back into the band in the future”.
“The central forecasts have [inflation] not coming back into the band into 2025,” Bullock said.
“So, if we were to see some acceleration and get some more confidence that [it is, then] possible rate cuts might be something on the agenda, but at the moment, we’re not seeing that.
“We’re in a position where we’re cautious. We want to wait and see. As I said, there are risks on both sides and we need to be conscious of that.”
Mortgage industry responds to rate hold
Members of the mortgage industry responded to the second rate hold for 2024 as good news for borrowers.
Finsure Group chief executive Simon Bednar said that mortgage holders should be “confident of interest rates going no higher with prospects of a cut before the end of the year”.
Bednar emphasised that brokers have played a “key role in helping customers through the higher rates and the cost-of-living crisis”.
CEO of Mortgage Choice, Anthony Waldron, urged mortgagors to “take control of their home loans now, rather than wait and see” what will happen with interest rates.
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“If you’re planning to buy a property in the coming months, make an appointment to speak to your broker to understand your borrowing power and explore your loan options,” Waldron added.
[RELATED: Cash rate continues to hold steady]
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