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Jonathan Barrett<\/p>\nBullock says she doesn\u2019t see the ‘economy cracking at this point’Jonathan Barrett<\/p>\n
Bullock says she doesn\u2019t \u201csee the economy cracking at this point\u201d even though some people will feel like they are experiencing a recession.<\/p>\n
The decision to raise interest rates for a fifth time this year will face inevitable accusations the RBA is pushing the country into an economic downturn.<\/p>\n
Bullock pushed back against that framing:<\/p>\n
double quotation markOur central forecasts do not see us going into recession, but it does see growth slowing quite markedly,\u201d Bullock says.<\/p>\n
It shows that consumption is quite sluggish, and I think that is going to make people feel like it\u2019s a recession because they feel poorer, their spending can\u2019t grow very quickly because their incomes aren\u2019t growing very quickly.<\/p>\n
Share<\/a><\/p>\n Updated at\u00a000.45 EST<\/p>\n Key events<\/p>\n Australian share market ends higher after RBA rate hike<\/p>\n The Australian stock market ended higher after the central bank did what it was expected to do and hiked interest rates for the fifth time this calendar year.<\/p>\n The main S&P\/ASX200 index rose 30.3 points, or 0.3%, to 8886.8, as the broader All Ordinaries gained 31.7 points, or 0.4%, to 9008.9.<\/p>\n Most of the market\u2019s 11 sectors were in the green, with the major materials and consumer stocks leading the way, while the energy sector carried most of the loss-makers.<\/p>\n The Reserve Bank board ended its two-day meeting on monetary policy on Tuesday with a 25 basis point rise in the cash interest rate to 4.85%.<\/p>\n The Australian dollar was buying 69.77 US cents, down from 70.21 US cents at 5pm on Monday.<\/p>\n \u2013 Australian Associated Press<\/p>\n Photograph: Hollie Adams\/ReutersShare<\/a><\/p>\n Updated at\u00a000.41 EST<\/p>\n Bullock asked about effect of US-Israel war in Iran on interest rates<\/p>\n Guardian Australia\u2019s economics editor, Patrick Commins, asks Bullock whether the RBA would have raised rates if oil prices had stayed low.<\/p>\n In other words, what would have happened had the US and Israel not launched strikes against Iran?<\/p>\n Bullock gives a nuanced response, pointing out that Australia already had a problem with \u201cexcess demand\u201d that required cooling.<\/p>\n double quotation markNow, would that have meant that we had to go up the same amount? I don\u2019t know the answer to that.<\/p>\n It\u2019s possible that it\u2019s caused interest rates to mean they have to be a little bit higher.<\/p>\n Bullock goes on to articulate an economic risk posed by raising inflation expectations caused by high oil prices: as consumers resign themselves to higher prices, businesses lift theirs ahead of anticipated rising costs, creating a self-fulfilling loop that entrenches inflation.<\/p>\n Share<\/a><\/p>\n Updated at\u00a000.24 EST<\/p>\n RBA independence from government \u2018a two-way street\u2019, Bullock says<\/p>\n Michele Bullock has described independence as a \u201ctwo-way street\u201d, noting that she doesn\u2019t tell the government what to spend on, and that the government doesn\u2019t tell the RBA what to do with rates.<\/p>\n The role of public sector spending in fuelling inflation looms large, with Labor under pressure from critics over five rate hikes this year.<\/p>\n Bullock says that governments need to decide on how much spending is required to provide for the nation. She says:<\/p>\n double quotation markBut that is for governments to decide. Independence is a two-way street. I don\u2019t tell them what to do with fiscal policy. They don\u2019t tell me what to do with interest rates.<\/p>\n Share<\/a><\/p>\n Updated at\u00a000.14 EST<\/p>\n Unemployment and housing concerns behind board split: RBA governor<\/p>\n More from Michele Bullock\u2019s press conference:<\/p>\n The RBA decision to raise rates was split, with three members of the rate-setting board preferring a hold, while six voted to raise.<\/p>\n Bullock says those in favour of a hold were concerned about risks to the economy, including rising unemployment and housing weakness. Bullock said:<\/p>\n double quotation markThey felt that there were potential downside risks in these circumstances, particularly since we\u2019d already done four interest rate rises, and maybe we should wait a bit longer to get some more data to test that.<\/p>\n Bullock says market watchers shouldn\u2019t interpret the split decision as a sign the RBA won\u2019t raise further if inflation risks materialise.<\/p>\n Share<\/a><\/p>\n Updated at\u00a000.06 EST<\/p>\n Michele Bullock addresses media following rate hike decision The RBA governor, Michele Bullock, says \u201cthis is not the news that many Australians want to hear, but it is what\u2019s needed to get inflation down\u201d.<\/p>\n She says \u201csome pain now will prevent even worse pain down the track\u201d.<\/p>\n double quotation markI understand that today\u2019s decision is going to be difficult for Australians with mortgages, many of whom are already managing large repayments.<\/p>\n But households with mortgages are not the only Australians doing it tough. Every household is dealing with higher prices for groceries, electricity, insurance, and other essentials.<\/p>\n High inflation is particularly painful for Australians on lower incomes, including people who rent and have little or no savings to fall back on.<\/p>\n The comments were made in opening remarks to journalists in Sydney ahead of questions.<\/p>\n Photograph: Jeremy Piper\/ReutersShare<\/a><\/p>\n Updated at\u00a023.52 EST<\/p>\n Economists intrepret RBA\u2019s decision <\/p>\n Several economists are interpreting the RBA\u2019s statement accompanying the rate hike as \u201cdovish\u201d, which means further hikes are less likely.<\/p>\n UBS economists describe the decision as \u201cclearly dovish\u201d while Anthony Malouf, economist at Ebury, says there is an \u201cabsence of a clear tightening bias\u201d.<\/p>\n The Australian dollar also immediately dropped against its US counterpart after the decision, which shows traders do not believe the central bank is, at this stage, looking to hike much further.<\/p>\n This could all change if inflation remains elevated, but for the moment, some economists and currency traders believe this could be the last hike, at least for a while.<\/p>\n Share<\/a>Chalmers plays down role of federal budget on inflation<\/p>\n Chalmers was asked about the federal budget and its impact on inflation. He said:<\/p>\n double quotation markOur budgets are not what\u2019s putting upward pressure on inflation. But we can play a helpful role and that\u2019s what we intend to do.<\/p>\n He was also asked if he\u2019d consider stepping aside.<\/p>\n \u201cNo,\u201d the treasurer said.<\/p>\n Share<\/a><\/p>\n Updated at\u00a023.25 EST<\/p>\n Chalmers says rate hike will be \u2018difficult news\u2019 for Australians already paying ‘hefty price’<\/p>\n Jim Chalmers, the treasurer, is speaking now after the RBA\u2019s decision. He said:<\/p>\n double quotation markToday\u2019s decision was widely expected, but that doesn\u2019t make it any easier for Australian families and businesses to absorb. It will be difficult news for many Australians who are already paying a hefty price for circumstances outside of their control.<\/p>\n He pointed to the ongoing war in the Middle East as a major factor in inflation:<\/p>\n double quotation markThe war\u2019s in its ninth month and its re-escalation is putting sustained upward pressure on inflation.<\/p>\n It\u2019s weighing on growth and its end can\u2019t come soon enough for the global economy or for Australians facing cost of living pressures.<\/p>\n Jim Chalmers. Photograph: Lukas Coch\/AAPShare<\/a><\/p>\n Updated at\u00a023.55 EST<\/p>\n Macquarie Bank announces it will pass rate rise on<\/p>\n Macquarie Bank has already announced it will pass on the interest rate rise to mortgage holders.<\/p>\n The bank said it will increase variable home loans by 0.25%, effective 19 November. It will also increase ongoing variable rates paid on its transactions and savings accounts by 0.25%, a boon to savers. Ben Perham, the head of personal banking, said:<\/p>\n double quotation markWith household budgets already feeling the strain, today\u2019s decision by the RBA will be challenging for many Australians.<\/p>\n To help our variable home loan customers prepare, we\u2019re again waiting more than two weeks before this latest increase takes effect.<\/p>\n Photograph: David Gray\/ReutersShare<\/a><\/p>\n Updated at\u00a023.14 EST<\/p>\n The cash rate is now the highest it has been in 18 years<\/p>\n A chart showing the cash rate<\/a>Share<\/a><\/p>\n Updated at\u00a022.55 EST<\/p>\n RBA board split on decision to raise cash rate<\/p>\n The decision was not a unanimous one: six members of the RBA board voted to raise the cash rate, while three voted to leave it unchanged.<\/p>\n The RBA said in a media release:<\/p>\n double quotation markThe Board is conscious of the period in which inflation has been too high. Given the revised inflation outlook and the continuing upside risks, the Board judged that a further tightening in financial conditions is warranted to support the return of inflation to target.<\/p>\n The Board will continue to do what it considers necessary to bring inflation sustainably back to target.<\/p>\nJonathan Barrett<\/p>\nJonathan Barrett<\/p>\nJonathan Barrett<\/p>\nJonathan Barrett<\/p>\nJonathan Barrett<\/p>\n