{"id":642011,"date":"2026-06-16T17:34:05","date_gmt":"2026-06-16T17:34:05","guid":{"rendered":"https:\/\/www.newsbeep.com\/uk\/642011\/"},"modified":"2026-06-16T17:34:05","modified_gmt":"2026-06-16T17:34:05","slug":"finally-an-interest-rate-reprieve-but-a-ceasefire-in-the-middle-east-doesnt-have-the-rba-popping-champagne-yet-australian-economy","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/uk\/642011\/","title":{"rendered":"Finally, an interest rate reprieve \u2013 but a ceasefire in the Middle East doesn\u2019t have the RBA popping champagne yet | Australian economy"},"content":{"rendered":"

It will take more than a ceasefire in the Middle East to prevent the Reserve Bank from hiking interest rates again.<\/p>\n

That was the strong message from the RBA governor, Michele Bullock<\/a>, after the central bank held its cash rate at 4.35%, putting an end to a run of three increases.<\/p>\n

Higher borrowing costs have been \u201ctough\u201d on households, Bullock conceded during her regular post-meeting press conference, but there could be no let-up in the battle to (eventually) get consumer price growth into the 2-3% target range.<\/p>\n

So yes, things are tough \u2013 but they would get much tougher if inflation was left to run rampant, she reminded us for the umpteenth time.<\/p>\n

Prices were rising too quickly even before the US and Israel attacked Iran at the end of February and triggered the closure of the world\u2019s most important oil shipping route, the strait of Hormuz.<\/p>\n

\u201cI want to be very clear that inflation remains too high,\u201d Bullock said.<\/p>\n

\u201cToday\u2019s decision does not rule out further tightening in monetary policy if that is what is required to bring inflation down.\u201d<\/p>\n

Sign up for the Breaking News Australia email <\/a><\/p>\n

Still, for all the tough talk, financial markets are not convinced the RBA will need to go again, putting the probability of a hike by year\u2019s end at a little over 50%.<\/p>\n

Economists are roughly split on whether interest rates will need to rise again, and the governor\u2019s comments did nothing to change anybody\u2019s mind.<\/p>\n

The economy slowed markedly at the start of the year, and interest rates are contributing to that slowdown.<\/p>\n

\"RBARBA interest rates: governor Michele Bullock explains decision to hold cash rate at 4.35% \u2013 video<\/p>\n

Unemployment has jumped to 4.5%<\/a> \u2013 its highest since late 2021 \u2013 and is set to push a bit higher.<\/p>\n

Consumer confidence is at around its lowest levels on record; we are as pessimistic as we were during the height of the pandemic.<\/p>\n

Rising unemployment and slowing growth suggests lower interest rates, or at least no more hikes. Inflation at 4.2%, however, argues the opposite \u2013 and hence the difficult terrain the RBA is trying to navigate.<\/p>\n

Then there\u2019s geopolitics.<\/p>\n

Global oil prices have retreated to three-month lows of about $US83 a barrel as news emerged late last week that a peace deal between the US and Iran<\/a> would be signed.<\/p>\n

Any progress towards peace is welcome, but the cork remains firmly in the champagne bottle.<\/p>\n

It will take time for shipping companies to regain the confidence to start travelling through the strait of Hormuz. Insurance costs will be sky-high, and months of work will be needed to repair energy infrastructure damaged in the conflict.<\/p>\n

Bullock \u201cwelcomed\u201d reports \u201cthat an agreement has been reached to end the conflict in the Middle East\u201d.<\/p>\n

\u201cIf the conflict does end and the strait of Hormuz is reopened, this should support the flow of commodities and lower prices,\u201d she said.<\/p>\n

\u201cBut this could take some time, and an orderly resolution is still not assured, meaning there are still upside risks to inflation and downside risks to growth.\u201d<\/p>\n

So not a gamechanger, then.<\/p>\n

Jim Chalmers, the treasurer, was similarly realistic.<\/p>\n

\u201cWe\u2019re very pleased with developments, but realistic about how long it will take for the world economy to normalise,\u201d he said \u2013 even if the ceasefire holds.<\/p>\n

Still, there\u2019s rising optimism that we can at least start ruling out the worst-case scenarios that the strait could remain shut into 2027.<\/p>\n

And at this moment, any optimism is welcome.<\/p>\n","protected":false},"excerpt":{"rendered":"It will take more than a ceasefire in the Middle East to prevent the Reserve Bank from hiking…\n","protected":false},"author":2,"featured_media":642012,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[84,1294,56,54,55],"class_list":["post-642011","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-business","tag-economy","tag-uk","tag-united-kingdom","tag-unitedkingdom"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/642011","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/comments?post=642011"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/642011\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media\/642012"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media?parent=642011"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/categories?post=642011"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/tags?post=642011"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}