By Poppy Johnston and Kat Wong
AUSTRALIAN borrowers are rightly disappointed that they won’t get an interest rate cut this month, but the Treasurer says there is a silver lining in the way inflation is tracking.
Financial markets and economists were overwhelmingly tipping the central bank to deliver a 25 basis point cut last Tuesday.
But its board instead decided to wait for more evidence that inflation was easing before considering lowering the 3.85 per cent cash interest rate.
“It’s fair to say there were millions of people who were hoping for more rate relief yesterday and didn’t get it,” Treasurer Jim Chalmers told ABC radio.
“(But) it should be a source of considerable pride to Australians that we’ve done something here that other countries haven’t been able to do.
“We haven’t paid for progress on inflation with much higher unemployment – that’s a good thing.”
Interest rates have already been cut twice this year as inflation tracked lower and the central bank’s focus switched to growth prospects and job market resilience.
Reserve Bank of Australia Governor Michele Bullock acknowledged households with mortgages would have been “very keen” for another interest rate cut.
“I’m also really conscious that we don’t want to end up having to fight inflation again,” she said.
The Australian Retailers Association described last week’s decision as a “missed opportunity” to improve the outlook of a sector employing one-in-ten Australians.
“Weak consumer spending and high business costs continue to put pressure on retailers,” the association’s Chief Executive Chris Rodwell said.
Real Estate Institute of Australia President Leanne Pilkington said the July call meant high borrowing costs for first home buyers.
“We understand the RBA’s priority is returning inflation to its target band but this needs to be balanced against the risk of further dampening housing demand and locking first home buyers out of the market,” she said.
Federal Housing Minister Clare O’Neil said that while the decision was disappointing for many, the central bank was still on track for more interest rate cuts.
“The RBA told us that this is about pace, not direction,” she told Seven’s Sunrise program last week.
“The RBA has already cut interest rates twice this year and is kind of indicating that they want to keep moving on that, but they’re being very cautious.”
Ms Bullock said the question of housing prices was largely one for governments.
