Stalled rate cut a blow to workers

Australian Unions are disappointed in today’s decision by the Reserve Bank of Australia not to cut interest rates for the third time this year.

A quarter of a percentage point cut to the official cash rate would have resulted in interest rate relief of around $100 a month for people with an average mortgage, or around $1,200 a year; on top of the two prior rate cuts, it would have saved mortgage holders around $3,600 per year.

The latest monthly inflation indicator showed trimmed mean – the RBA’s preferred measure of inflation – was at 2.4 per cent in May, right in the middle of the target band where the RBA wants it.

With inflation having fallen substantially and now back within the target range and the unemployment rate low and stable the Reserve Bank should have had the confidence to move on rates today.

Quotes attributable to ACTU President, Michele O’Neil:

“Today’s decision by the RBA to keep rates on hold is a blow for working people, especially those struggling under financial strain.

“Working families need to see rates come down further throughout the course of the year as economic conditions improve.

“Working people can’t afford to wait longer, especially not when all the key economic indicators are trending steadily in the direction the Reserve Bank wants them to.

“For many, it will come as a shock that the Reserve Bank of Australia has not put its shoulder to the wheel to help them with more rates relief.

“Working people still need to see further real wage growth throughout the economy to make up for the ground lost post-pandemic, when prices were high and some big businesses engaged in unconscionable price gouging.

“The Annual Wage Review wage increases, which took effect from July 1 will boost the pay of 2.9 million Australians who rely on award wages, but that real wages growth must continue so that working people can finally start to rebuild from a more solid financial base.  The RBA has today failed to provide their bit of much-needed support.”