The Reserve Bank\u2019s governor, Michele Bullock, has effectively ruled out further rate cuts and flagged that hikes may be needed in 2026 if the recent inflationary rebound proves persistent.<\/p>\n
Speaking at a press conference after the widely expected decision to hold the cash rate at 3.6%, Bullock seemed surprisingly upbeat as she delivered the bad news to the roughly 3.3 million households with a mortgage.<\/p>\n
\u201cI would say at this moment that, given what\u2019s happening with underlying momentum in the economy, it does look like additional cuts are not needed.\u201d<\/p>\n
After months of umming and ahhing about \u201cupside and downside\u201d risks to the outlook, the recent string of economic data has clarified matters for the RBA board members.<\/p>\n
\u201cTheir focus now has moved much more towards inflation and being alert to the possibility that if that really is staying up, then they might have to do something<\/a>,\u201d the governor said.<\/p>\n Just in case anybody was not getting it, Bullock was happy to fill in the blanks: \u201cI don\u2019t think there are interest rate cuts on the horizon for the foreseeable future.<\/p>\n \u201cThe question is, is it just an extended hold from here? Or is it [a] possibility of a rate rise? I couldn\u2019t put a probability on those, but I think they\u2019re the two things that the board will be looking closely at coming into the new year.\u201d<\/p>\n Sign up: AU Breaking News email<\/a><\/p>\n If she is correct, this will be the shortest and shallowest rate cut cycle in the 30-year history of the independent central bank: just three cuts delivered in February, May and August.<\/p>\n It\u2019s sure to leave many mortgage holders feeling short-changed, especially given it follows the RBA\u2019s equally historic 13 rate hikes through 2022 and 2023.<\/p>\n Nor are just three rate cuts a great return for the Albanese government\u2019s economic strategy.<\/p>\n It leaves Jim Chalmers<\/a> exposed to the Coalition attack line that Labor\u2019s \u201cspendathon\u201d is to blame<\/a> for overheating the economy.<\/p>\n What\u2019s more, the treasurer has already warned Australians they should brace for more bad news in next week\u2019s mid-year budget.<\/p>\n Fiscal pressures are intensifying and that demands some \u201cdifficult decision\u201d \u2013 such as this week\u2019s decision to put an end to household energy bill rebates<\/a>.<\/p>\n Plus, data from the Australian Bureau of Statistics showed consumer price growth jumped to 3.8% in the year to October \u2013 far higher than expected, and well above the top end of the central bank\u2019s 2-3% target range.<\/p>\n skip past newsletter promotion<\/a><\/p>\n Sign up to Breaking News Australia<\/p>\n Get the most important news as it breaks<\/p>\n Privacy Notice: Newsletters may contain information about charities, online ads, and content funded by outside parties. If you do not have an account, we will create a guest account for you on theguardian.com<\/a> to send you this newsletter. You can complete full registration at any time. For more information about how we use your data see our Privacy Policy<\/a>. We use Google reCaptcha to protect our website and the Google Privacy Policy<\/a> and Terms of Service<\/a> apply.<\/p>\n after newsletter promotion<\/p>\n Bullock, wary of incurring the treasurer\u2019s wrath, was quick to hose down any suggestions that she has had any \u201cdifficult conversations\u201d with Chalmers about the level of government spending.<\/p>\n \u201cI\u2019ve said a number of times that governments \u2026 have a job to provide services and infrastructure to Australians. They have a lot of things to juggle, and at the same time try to make sure that they contribute to bringing inflation down, which I think is very top of mind for them.<\/p>\n \u201cAnd whenever I speak to the treasurer, he\u2019s always very conscious of that.\u201d<\/p>\n The RBA board next meets in February, at which point Bullock and her board will know more about whether the rise in inflation is here to stay, and what they might need to do about it.<\/p>\n NAB\u2019s chief economist, Sally Auld, is already warning there\u2019s a \u201clive\u201d possibility that a hike could come as soon as this next meeting.<\/p>\n Not the Christmas message many would have wanted, but a good reason to not overdo the festive spending this year.<\/p>\n Patrick Commins is Guardian Australia\u2019s economics editor<\/p>\n","protected":false},"excerpt":{"rendered":"The Reserve Bank\u2019s governor, Michele Bullock, has effectively ruled out further rate cuts and flagged that hikes may…\n","protected":false},"author":2,"featured_media":176653,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[14],"tags":[138,246,111,139,69,244,245],"class_list":{"0":"post-176652","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-personal-finance","8":"tag-business","9":"tag-finance","10":"tag-new-zealand","11":"tag-newzealand","12":"tag-nz","13":"tag-personal-finance","14":"tag-personalfinance"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/176652","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/comments?post=176652"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/176652\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media\/176653"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media?parent=176652"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/categories?post=176652"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/tags?post=176652"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}