The Reserve Bank issued a fresh interest rate hike warning to Aussies on Philip Lowe’s last day in office
The Reserve Bank almost raised rates again this month, and warned that further rate hikes may be needed in the coming months.
With a warning that Australia’s economy is on a slower-than-expected path, minutes from its July board meeting showed the central bank still considered raising the cash rate by another 25 basis points in July.
The July meeting was the last before it was announced that Philip Lowe would step down as governor starting in September and be replaced by Deputy Governor Michelle Bullock.
At the meeting, the board ultimately voted to keep rates steady at 4.1 percent, minutes of the meeting said, noting that the full impact of aggressive monetary policy over the previous 14 months had yet to be fully observed.
The Reserve Bank of Australia has issued a new interest rate warning to Australians as Philip Lowe’s governorship dies.
The board also acknowledged that inflation is coming down; And the slowdown in economic growth is working to bring demand and supply closer together which will ‘work to reduce inflation over time’.
The bank warned that the economy could be slower than expected, with members noting that there was ‘considerable uncertainty’ about the resilience of household spending and that the ‘low’ spending on many households’ finances could further reduce spending.
Ultimately, the board judged the case for keeping cash rates ‘strong’.
‘Noting both the uncertainty around the outlook and the significant increase in interest rates to date, members agreed to keep the cash rate steady and reassess the situation at the August meeting,’ the minutes said.
‘Members agreed that some further tightening of monetary policy may be needed to bring inflation back to target within a reasonable timeframe, but this depends on how the economy and inflation evolve.’
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