RBA Board pushes cash rate to 4.1 percent
Mortgage holders are set to feel the pinch as board wrestles with stubbornly high services inflation
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The Reserve Bank of Australia has decided to raise the cash rate by a further 25 basis points in a meeting of the RBA Board today.
The interest rate now stands at 4.1 percent and represents the 12th increase since April last year.
In a statement by Governor Philip Lowe, the board noted that inflation had already peaked at 7 percent but it looked likely to remain stubbornly high for some time. With the understanding that it is likely to be an unpopular move with mortgage holders, Mr Lowe said the decision was taken to provide ‘greater confidence’ that inflation would fall to manageable levels within a reasonable time frame.
“High inflation makes life difficult for people and damages the functioning of the economy,” Mr Lowe said. “It erodes the value of savings, hurts family budgets, makes it harder for businesses to plan and invest, and worsens income inequality.
“And if high inflation were to become entrenched in people’s expectations, it would be very costly to reduce later, involving even higher interest rates and a larger rise in unemployment.”
Although goods price inflation had slowed, he noted the impact of high services inflation, which remains high in overseas markets as well. Last week’s announcement by the Fair Work Commission that will see award wages rise by 5.75 percent and minimum wages by 8.6 percent from July 1 had further pointed to a likely rate rise.
Mr Lowe said the Board would continue to monitor economic conditions, including household spending and productivity both here and overseas but foreshadowed ‘some further tightening of monetary policy may be required’.
“The Board is still seeking to keep the economy on an even keel as inflation returns to the 2–3 per cent target range, but the path to achieving a soft landing remains a narrow one,” he said.
A significant source of uncertainty continues to be the outlook for household consumption, he said.
“The combination of higher interest rates and cost-of-living pressures is leading to a substantial slowing in household spending. Housing prices are rising again and some households have substantial savings buffers, although others are experiencing a painful squeeze on their finances.
“There are also uncertainties regarding the global economy, which is expected to grow at a below-average rate over the next couple of years.”
PropTrack senior economist Eleanor Creagh said projected wage increases and persistently low levels of unemployment had given the board ‘further headroom’ to consider today’s decision to raise the cash rate.
“The labour market remains tight,” she said. “Despite the unemployment rate rising, it remains close to multi-decade lows. The pipeline of wage increases in the public sector and (the) minimum wage decision are expected to maintain wages pressure, potentially fuelling inflation to remain elevated.”
The risk of a wage-price spiral is an ongoing concern for the central bank, she said.
“The RBA expects it will take a couple of years before inflation returns to the top of the target range, with the statement highlighting that the board is ready to do more to get inflation back down should it be necessary.”
This is in addition to rises experienced in housing prices this year, despite consistent increases in the cash rate. Ms Creagh said the conditions for higher home prices remained, despite the interest rate hike.
“The factors precipitating stronger housing demand – population growth and tight rental markets – remain alongside an undersupply of new homes,” she said. “This may see home prices to continue to lift in the months ahead.”
As housing drives wealth and policy debate, the real risk is an economy hooked on growth without productivity to sustain it.
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Odd Culture Group brings a new kind of after-dark energy to the CBD, where daiquiris, disco and design collide beneath the city streets.
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Sydney’s nightlife has long flirted with reinvention, but its latest arrival suggests something more deliberate is taking shape beneath the surface.
Razz Room, the new underground bar and disco from Odd Culture Group, has opened in the CBD, marking the group’s first step into the city centre.
Tucked below street level on York Street, the venue blends cocktail culture with a shifting, late-night rhythm that moves from after-work drinks to full dancefloor immersion.
The space itself is designed to evolve over the course of an evening. An upper bar offers a more intimate setting, suited to early drinks and conversation, while a sunken dancefloor anchors the venue’s later hours, with a rotating program of DJs and live performances.
“Razz Room will really change shape throughout a single evening,” says Odd Culture Group CEO Rebecca Lines.
“Earlier, it’s geared towards post-work drinks with a happy hour, substantial food offering, and music at a level where you can still talk.”
As the night progresses, that tone shifts.
“As the evening progresses at Razz Room, you can expect the music to get a little louder and the focus will shift to live performance with recurring residencies and DJs that flow from disco to house, funk, and jazz,” Rebecca says.
The concept draws heavily on New York’s underground club scene before disco became mainstream, referencing venues such as The Mudd Club and Paradise Garage. But the intention is not nostalgia.
“The space told us what it wanted to be,” Lines explains. “Disco started as a counter culture… Razz Room is no nostalgia project, it’s a reimagining of the next era of the discotheque.”
Design, too, plays its part in shaping the experience. The upper level is warm and textural, with timber finishes and burnt-orange tones, while the sunken floor shifts into a more theatrical mood, combining Art Deco references with a raw, industrial edge.
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