August interest rate recap: RBA holds steady once again

Last week, Hume Bank CEO, Stephen Capello caught up with Kylie and Matt of 1494 2AY to discuss the Reserve Bank of Australia’s (RBA) August interest rate decision. 

While it was a familiar narrative with the RBA putting interest rates on hold again in August, Stephen was firm in his belief that we shouldn’t expect a rate cut any time soon.

“There were positive things from the RBA. We were spared the pain of an interest rate hike, with rates left at 4.35%. The other clear message was no rate cut was ever discussed. The expectation is that rates won’t be cut for at least another six months. Unless we get inflation down, there’s no reason for the RBA to act. We should probably get prepared for rate rises if inflation doesn’t move.” 

People are doing it tough right now, which feels like an understatement given the significant impacts of inflation on cost of living and steady, but high interest rates.

“We saw that in the annual inflation figures that went up slightly in June with that rate at 3.8%. This is hurting households. Just looking at rent which has increased and increasing too quickly for those who rent; up 7% per annum and up 14% over the past two years. We have 30% of households in Australia renting. They spend about 30% of their income on rent, which will now be closer to 35% if the wages haven’t kept pace. Not to mention increasing insurance at record highs making it almost unaffordable to insure yourself.”

There is some good news though, with food costs easing since their peak in 2022, the challenge however, is unfavourable growing conditions nationally driving up the cost of fruit and vegetables. This then has flow on effects when families start compromising on nutrition due to high costs as it leads to bigger problems in our community that we have to deal with. 

Another area of concern for Stephen is Wall Street’s impact on the ASX and future interest rate shifts. 

“The RBA should consider our linkage to the US and global economies, not just inflation.”

Listen to the full interview here.

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