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Reserve Bank of Australia (RBA) Governor Michele Bullock, speaking at a conference in Hong Kong today, acknowledged the strain on borrowers following 13 consecutive rate hikes. Despite the unrest, Bullock highlighted the resilience of Australian households and businesses, bolstered by savings accumulated during the pandemic and a recovery in housing prices that has strengthened the sense of wealth.
The central bank’s focus remains on balancing the need to control inflation with the goal of avoiding an undue slowdown in the economy and preventing a rise in unemployment. Bullock noted the challenges faced by businesses in dealing with higher energy costs and rents, which have indirectly led to rising unit labor costs as companies pass on increased wages to cope with strong consumer demand. This scenario suggests that inflationary pressures are still present in the economy.
Looking ahead to the RBA’s next board meeting on December 5, expectations are tilted toward holding the current interest rate. However, there is a split in speculation about the possibility of a rate hike in February as the RBA continues to assess economic conditions and inflationary trends. The upcoming meeting will be closely watched for further insights into the central bank’s policy trajectory amid these economic dynamics.
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