Logo

The Australian central bank says current rates pressure many families, will change if needed.

TraderKnows
TraderKnows
06-26

After the Reserve Bank of Australia raised interest rates, many people's lives have become increasingly stressed, and the Reserve Bank has yet to decide on making any changes.

The Central Bank of Australia stated on Wednesday that the current monetary policy is restrictive and the current cash rate is putting economic pressure on many households, but if necessary, it could be tightened further to control inflation.

In a speech about banking in Melbourne, Reserve Bank of Australia Assistant Governor Christopher Kent said the 4.35% interest rate is leading to a slowdown in demand growth and a reduction in inflation.

"We know that many people are feeling the financial pinch due to rising interest rates," Kent said, noting that mortgage payments have increased to a record 10% of household disposable income.

Kent mentioned that the current interest rate is significantly higher than all estimates of the neutral rate, which neither stimulates nor suppresses economic growth.

Since May 2022, the Reserve Bank of Australia has raised rates by an astonishing 425 basis points, but with an inflation rate of 3.6%—well above its target range of 2-3%—it has kept rates unchanged for five consecutive meetings.

Reserve Bank of Australia Governor Michele Bullock told reporters earlier this month that the restrictive policy was one of the reasons policymakers were reluctant to raise rates further at the June policy meeting.

The market expects only a slight possibility of a rate cut until April next year and anticipates a reduction of just 43 basis points by the end of 2025.

Kent reiterated that the central bank is in no hurry to ease the policy.

SKYPE TU

公众号2

Risk Warning and Disclaimer

The market carries risks, and investment should be cautious. This article does not constitute personal investment advice and has not taken into account individual users' specific investment goals, financial situations, or needs. Users should consider whether any opinions, viewpoints, or conclusions in this article are suitable for their particular circumstances. Investing based on this is at one's own responsibility.

The End

Wiki

Interest rate cut

A rate cut refers to the central bank adjusting the interest rate level so that it is lower than before, as a form of monetary policy. It is a means by which the central bank affects the supply and demand relationship in the money market, money creation, and the level of interest rates by changing the level of interest rates. Rate cuts are usually used to counter inflation, stimulate economic growth, or alleviate economic downturn pressures.

Organization

Risk Warning

TraderKnows is a financial media platform, with information displayed coming from public networks or uploaded by users. TraderKnows does not endorse any trading platform or variety. We bear no responsibility for any trading disputes or losses arising from the use of this information. Please be aware that displayed information may be delayed, and users should independently verify it to ensure its accuracy.

Logo

Contact Us

Social Media

footer1