RBA Gov. Bullock Continues to Rule Out Near-Term Interest Rate Cuts
The remarks suggest the central bank will lag well behind its global counterparts in cutting interest rates
2 min
SYDNEY—The Reserve Bank of Australia has ruled out the prospect of near-term interest rate cuts as it remains wary of upside risks to inflation which has proved more resilient than expected.
The central bank Gov. Michele Bullock told a parliamentary committee Friday that while money markets were anticipating an interest-rate cut before the end of the year, the probability of that was low.
The RBA’s board’s message after its recent policy meeting “was that it is premature to be thinking about rate cuts,” she said.
“Inflation is still too high and, in underlying terms, is not expected to be back in the top of the band until the end of next year,” Bullock said.
While circumstances could change, the outlook was uncertain, and based on what the board knows at present, it doesn’t expect to be in a position to cut rates in the near term, Bullock said.
Bullock’s comments are expected to disappoint home buyers who are struggling under the weight of elevated interest rates and immense debt.
The remarks also suggest that the RBA will lag well behind its global counterparts in cutting interest rates.
The RBA has held the official cash rate at 4.35% since November, having begun an aggressive tightening cycle back in May 2022, when the OCR was sitting at an emergency low of 0.10%.
Still, the RBA adopted a much gentler approach to raising interest rates than most of its G-10 counterparts, arguing that protecting employment was a key policy goal.
“I understand that this is not what many households want to hear. Those with mortgages are feeling the squeeze on their cash flows from the increase in interest rates over the past couple of years. Businesses too are facing higher borrowing costs. But the alternative of higher inflation for longer is much worse,” Bullock added.
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Australian shares fell on Thursday as Wall Street weakness, rising oil and persistent rate concerns weighed on most of the market. The S&P/ASX 200 declined 0.72 per cent to 8,702. The All Ordinaries lost 0.66 per cent to finish at 8,897. Mining stocks were hit particularly hard, while real estate also dragged on the index. …
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Borrowers cannot control the Reserve Bank, but they can control how exposed their household budget is to its next decision. The RBA meets on 29 September with inflation concerns still elevated and major-bank economists increasingly bringing forward their rate-rise calls. Fixed mortgage rates have also been moving, reducing the value of waiting for perfect certainty. …
Continue reading “What mortgage holders should do before the next RBA decision”
2 minAustralian shares fell on Thursday as Wall Street weakness, rising oil and persistent rate concerns weighed on most of the market.
The S&P/ASX 200 declined 0.72 per cent to 8,702. The All Ordinaries lost 0.66 per cent to finish at 8,897. Mining stocks were hit particularly hard, while real estate also dragged on the index.
Energy was the notable exception, gaining more than one per cent as Brent crude traded above US$103 a barrel. Oil had moved higher amid uncertainty surrounding potential US diesel-export restrictions and broader geopolitical supply risks. The move supported energy producers but renewed concern about inflation inputs across transport and the wider economy.
Gold shares were weak even as spot bullion remained historically elevated. The All Ordinaries Gold index fell about 2.25 per cent, showing that equity performance can diverge from the commodity because of valuation, currency, operating and company-specific factors.
Zip was a prominent loser, falling 11.38 per cent after the company reported short sales after the previous close. Nine Entertainment also weakened after UBS analysts warned of near-term revenue challenges associated with its advertising-supported subscription tier.
Premier Investments led larger winners despite caution about the retail environment. Breville, in which Premier owns a significant stake, also appeared among leading movers. In the broader ASX 300 screen, Myer gained 11.43 per cent and MAAS Group rose 7.93 per cent, while Lotus Resources fell 10.53 per cent. These percentage moves should be checked against company announcements and trading liquidity before attributing causes.
The Australian dollar was broadly flat at US70.38 cents. Spot gold was around US$4,280 an ounce, Brent crude approximately US$103.08 a barrel and iron ore near US$96.90 a tonne late in the session.
The rate outlook remains the central domestic catalyst. Labour-market weakness has not eliminated the possibility of an RBA increase next week, leaving banks, listed property and other rate-sensitive sectors exposed to changing expectations.
Market dashboard
S&P/ASX 200: 8,702, down 0.72 per cent.
All Ordinaries: 8,897, down 0.66 per cent.
Best sector: Energy, up more than one per cent.
Weakest areas: Real estate and materials were the major drags; confirm final sector percentages before publication.
Material winner: Premier Investments led the large-company gainers. Confirm its final closing move from the ASX before publication.
Material loser: Zip, down 11.38 per cent.
ASX 300 percentage leader: Myer, up 11.43 per cent.
ASX 300 percentage laggard: Zip, down 11.38 per cent.
AUD/USD: Approximately US$0.7038, broadly flat.
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