RBA delivers Christmas cash rate present
The Reserve Bank of Australia (RBA) has handed down its final cash rate decision for 2022.
After much conjecture about the trajectory of the cash rate, the RBA decided at its board meeting on Tuesday, 6 December, to lift the cash rate by 25 basis points to 3.10 per cent.
It was expected that the central bank moved to raise the cash rate a final time before Christmas in an attempt to further stem inflation, even with the Australian Bureau of Statistics’ (ABS) consumer price index rate of growth easing throughout October.
Real Estate Institute of Australia (REIA) president Hayden Groves called last week for the bank to heed to the latest ABS figures and relieve financial stresses from Australian borrowers heading into the holiday season.
“The current rate [of inflation] is below the budget forecast of 7.75 per cent and the RBA’s forecast of 8 per cent,” he said.
“There are lags between the RBA raising its cash rate and lenders passing on these increases to borrowers.”
The RBA, however, opted to keep its foot on the accelerator, according to RateCity research director Sally Tindall, who explained that “the board has said repeatedly it is prepared to do what it takes to get inflation back under control — one drop doesn’t mean ‘job done’”.
“This month’s inflation figures recorded a drop, but we’re still a long way from the target band of 2 to 3 per cent. With wages moving in the right direction and unemployment dropping back down to 3.4 per cent, the RBA has cover to fire off one last rate hike for the year,” she added.
Ms Tindall conceded, “the silly season is going to be a more serious one for a lot of families facing another cash rate hike before Christmas; at the same time, inflation is set to peak.”
Anneke Thompson, chief economist at CreditorWatch, said that “today’s decision by the RBA to further raise the cash rate will place undeniable financial pressure on Australian households”.
An additional interest rate increase compounds financial pressures already felt by Australian borrowers, especially considering November’s cash rate increase edged some borrowers closer to “uncharted waters”.
More from this writer:
-
Expert calls on government to review construction productivity, not major projects
-
RBA delivers hotly anticipated November cash rate call
-
Greens threaten 650% rate increase on Brisbane landlords
-
Dispelling some migration housing market myths
-
ACT developer under fire for multiple business failures
-
The Block Finale: Tom Panos to tell all
-
Australia dominates in the global luxury market’s top annual risers