The RBA should leave rates alone at its meeting today, peak body says
The Real Estate Institute of Australia is advocating for the Reserve Bank to maintain the current official interest rates during its meeting today.
According to REIA President Hayden Groves, despite a rise in the Consumer Price Index (CPI) in the September 2023 quarter, the overall trend in inflation remains unequivocally downward.
“The annual increase of 5.4 per cent is down on the June figure of 6.0%,” Groves said. “It is the third consecutive quarter of annual decreases, as well as the lowest since March 2022.”
Additionally, the trimmed mean, an analytical series that excludes significant price fluctuations, reported a 5.2% increase for the year, compared to 5.9% in the June quarter, REIA reported. This also represents a third consecutive quarterly decrease and reflects the lowest level since the September quarter of 2022.
“The reality is that it is a series of supply-side events that contributed to the September quarter result, not household spending and other demand-side factors,” Groves said. “These supply-side factors cannot be fixed with another rate rise. It is only the demand side that the RBA can influence with monetary policy, and it is already doing this.”
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Groves said that the slowing economy has resulted in a decline in consumer spending in real per capita terms over the past three months. Real income per person is also decreasing, and despite the unemployment rate remaining unchanged at 3.6% in September, monthly hours worked and full-time employment have decreased.
“With the CPI having peaked late last year and trending down combined with the fact that the full impact of earlier rate rises is still to be felt, there is little justification to increase interest rates beyond their current level,” Groves said.
Macroeconomist Warren Hogan said last week that the RBA would likely raise rates at today’s meeting. RBA governor Michele Bullock, meanwhile, is on record as saying the central bank “will not hesitate” to raise rates in order to control inflation.
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