PHOTO: RBA Governor drops truth bomb: Don’t expect Canadian-style relief — Aussie borrowers are in for a slow grind back to normal. FILE
📉 No Fast Fix for Borrowers as RBA Holds Firm at 3.85%
Australian borrowers hoping for swift interest rate relief have just been dealt a harsh reality check. The Reserve Bank of Australia (RBA) has made it clear: don’t expect big rate cuts like in Canada or New Zealand — because inflation at home is still far too sticky.
Speaking at the Anika Foundation Fundraising Lunch in Sydney, RBA Governor Michele Bullock confirmed that while inflation is softening, the RBA isn’t ready to pull the trigger on major easing.
“Interest rates in Australia did not rise as high as they did in some other economies, and so we may not need to lower them as much on the way down,” Bullock said.
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📊 Australia’s Rate Path Will Lag Behind
Despite inflation cooling to 2.4% in May, the RBA left the cash rate on hold at 3.85% at its July 8 meeting — shocking economists and rattling borrowers already under pressure.
🔍 Here’s how Australia compares:
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🇨🇦 Canada’s cash rate: 2.75%
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🇳🇿 New Zealand’s cash rate: 3.25%
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🇦🇺 Australia’s cash rate: 3.85% (and staying there, for now)
Yet Australian mortgage holders are paying more than their overseas counterparts — even as inflation here appears more under control.
🧠 RBA Playing the Long Game on Inflation
The RBA says it needs more proof that inflation will stay at the 2–3% target midpoint before cutting rates further.
📅 All eyes are now on the June quarter CPI data, due next week. Governor Bullock says that while a drop in the trimmed mean inflation rate is expected, volatile monthly indicators suggest the fall may not be as significant as hoped.
“We are looking for data to support the expectation that inflation is heading towards 2.5%,” she added.
🛑 Don’t Expect a 2008-Style Slashing… Yet
Bullock also downplayed fears that Trump’s tariffs or global instability would trigger a full-blown economic slowdown like in 2008 — but left the door open just in case.
“The board is prepared to respond decisively to adverse international developments if needed.”
In other words — unless things go badly wrong globally, don’t count on rapid cuts to rescue the housing market.
📉 Economy Weakening, But RBA Still Holding Line
Australia’s unemployment rate has climbed to 4.3% — the highest since November 2021 — as more people look for work in a slowing economy. Still, this is far lower than:
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🇨🇦 Canada: 6.9%
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🇳🇿 New Zealand: 5.1%
Bullock defended the RBA’s cautious stance, noting that:
“We increased the cash rate quickly at first – but we didn’t go as high as some other central banks.”
Had the RBA followed the U.S. Fed (5.25–5.5%), Canada (5%) or NZ (5.5%), she argued, the Australian economy would have risked a sharp and persistent rise in joblessness.
📆 Big Change Ahead: Monthly CPI Data Coming November
In a major move for transparency and policy precision, the ABS will shift to monthly CPI reporting from November — bringing Australia in line with the U.S. and other global economies.
📢 Australian Statistician Dr David Gruen said:
“This change will give the RBA more timely data to make decisions that impact every Australian household.”
🧾 Final Word:
This isn’t the interest rate relief Aussie homeowners were hoping for. With the RBA committed to a “measured and gradual” path, borrowers may need to brace for higher rates for longer — even as overseas counterparts enjoy earlier cuts.
For now, hope rests on the June CPI numbers. But unless inflation firmly lands in the 2.5% zone, the RBA won’t be moving quickly.
SOURCE: THE DAILY MAIL