Reserve Bank interest rates on hold in December meeting

ABC NEWS (Australia)

The Reserve Bank has left interest rates on hold for more than a year now but it's leaving the door open to a rate cut as soon as February. Economists are expecting multiple cuts next year but that may be too late for some borrowers under increasing mortgage stress.

Transcript

00:00There was no Christmas rate cut for borrowers, but the RBA Governor says the Central Bank

00:07is making progress.

00:09We're not saying that we've won the battle against inflation yet, but we're saying we've

00:13got a little bit more confidence.

00:14The Reserve Bank left the cash rate on hold at 4.35%, but could mortgage relief be far

00:21away?

00:22No.

00:23I couldn't describe such a scenario.

00:26I honestly don't know if we're going to be cutting in February.

00:28We're going to be looking at the data and be data driven.

00:31If we start to see the unemployment rate creeping higher in the next monthly set of employment

00:37figures, then I think it may cement that February rate cut.

00:41The Reserve Bank has been criticised for being too slow to lift interest rates when inflation

00:46took off a couple of years ago.

00:48Now there's a risk it might be taking too long to bring rates down, especially with

00:52the economy growing at its slowest rate in about three decades.

00:56Do you think there's the risk the RBA might repeat mistakes of the past by moving too

01:02slowly?

01:03If we really thought we had things wrong, we would have moved, David, I think is the

01:06answer to that.

01:07If it weren't for strong levels of migration and government spending, Australia would be

01:12in a recession.

01:13We know the economy's soft.

01:15We know that people are under substantial pressure.

01:17It is clear that this economy is sick and a doctor of spin is not going to fix it.

01:23Once the Reserve Bank gets underway, we'll likely see multiple rate reductions.

01:28I think we could probably see between three to four cuts in 2025.

01:32Even though there's talk of rate cuts in a few months, that's not soon enough for many

01:37borrowers.

01:38We need some action soon.

01:40If it's only talks, it gets us nowhere.

01:43The Reserve Bank faces a difficult balancing act.

01:46If it postpones a rate cut until May, when a general election is due, both sides of politics

01:51could be annoyed.

01:53For more UN videos visit www.un.org

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