The social media post follows RBA boss' statement at a high-powered meeting
The Reserve Bank boss is under fire after reportedly ignoring advice from her own analysts and saying Australian households and businesses were “in a pretty good position” even with interest rates at a 12-year high.
According to a Daily Mail Australia report, in late November last year, Reserve Bank Governor Michele Bullock spoke before central bankers at a high-powered meeting, saying Australians were able to cope with a series of cash rate hikes over 19 months “despite the political noise.”
“We've been surprised a little bit on the strength of activity,” she said. “It's held up a little better than we thought. That's meant that services price inflation has held up a bit more. So what we're observing is a bit more domestic price pressures than we'd expected.”
Bullock admitted, though, that many borrowers were “very unhappy” with the central bank, describing it as part of “political economy challenges.”
A Freedom of Information request tweet from former Senator Rex Patrick says the RBA’s Economic Analysis, released just days before Bullock’s speech, reported that community service organisations were inundated with pleas for help.
“Cost of living pressures remain acute for their constituents,” the analysts wrote. “More people than usual are seeking support from community services organisations, including wage earners and households with mortgages who have sought food support.
“Calls for support include housing assistance, financial counselling services, mental health services, domestic violence services and food support.”
Many of the commenters on Patrick’s tweets accused Bullock of being out of touch with the distress being felt worldwide, the report said.
Borrowers working harder to pay off loans
In October last year, the RBA reported that more Australian mortgage holders set aside more than a third of their income to pay off home repayments–an indication of a “red line” benchmark of financial stress, the Daily Mail report said. The percentage of variable-rate owner-occupier borrowers committing at least a third of their income rose from 4% in April 2022 to 20% in July 2023.
The report noted the majority of borrowers had said they saw their monthly payments increase by 30% to 50% during the same period.
Andrea Brischetto, head of financial stability at the RBA, said in December that mortgage repayments have pressured households, but she noted most were coping through working longer hours or getting better paying jobs.
“While there has been an increase in the number of borrowers who are under severe financial stress, the vast majority of borrowers remain able to cover basic expenses and service their loans,” she said.
Have thoughts about this story? Leave a comment below.
