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Our CEO caught up with Kylie and Matt of 1494 2AY to discuss the Reserve Bank of Australia’s decision to hold interest rates for the second month in a row.
Kylie starts the chat by commenting that it was welcome news on Tuesday. But many Australians are already feeling the pinch.
Stephen agreed, saying, despite the decision, the cash rate is still at the highest level since 2012. Pointing out that for those with a mortgage, this is only the third rate rise pause since May last year.
He says the latest economic data shows there are signs from economists that we may be at the end or nearing the end of the current rate rise cycle.
Matt then asks if the decision by the RBA to pause interest rates again means that inflation is heading in a downward trend.
Stephen says it’s a fair point, which was touched on during Tuesday’s RBA meeting. He says the June data indicates that things are heading in the right direction.
He adds some economists are highlighting that the slowdown of inflation is probably more dramatic than they would like. And they think it’s a result of the RBA raising rates too far without pausing to allow the full impact to flow through to the economy.
Despite the reprieve for the second month in a row, Stephen says the RBA did reiterate that it wants inflation to continue to moderate with the aim of reaching the 2 to 3 per cent target range.
He says the RBA was clear that it’s open to further rate hikes. And will leave them on the table until it’s confident the downward trajectory can be maintained.
Kylie goes on to mention that the latest ABS data highlights how many people are looking to cut costs. With a record amount of money being refinanced in the last year.
Stephen says the most recent number he’s seen was around 230 billion in refinancing in the last year, describing it as a huge number.
He says it is completely understandable, with a significant number of people coming off ultra fixed low rates of around 2 per cent. And they’re now facing rates of around 6 and some even close to 7 per cent.
He says there’s no doubt this is placing significant pressure on households, and they should be looking for a better deal if they can.
Stephen finished the chat with the observation that most experts are possibly cooling their expectations of further rate rises in the coming months.