Interest rates decision LIVE updates: Millions of Aussies bracing for the worst as RBA to hand down call
Updated . First published at
Key Updates
Latest posts
Why everyone’s expecting a hike
It wasn’t so long ago that the major banks were predicting rates had reached their peak, and that the RBA’s next move would be a cut, albeit not until next year.
But now the market has priced in a roughly 90 per cent chance of a hike today.
So why the change?
As always, it largely comes down to inflation.
While headline inflation slowed slightly in July – the last month we have data for – it didn’t tail off as much as expected, and core inflation remained steady.
Both figures remain well beyond the RBA’s 2-3 per cent target range, at 3.5 and 3.6 per cent respectively, and aren’t expected to come back to the middle of that sweet spot for more than a year.
While unemployment ticked up to a multi-year high last week, the jobless rate is still low by historical standards, and stronger-than-expected GDP figures released earlier this month suggested the RBA can hand down a hike without risking the economy grinding to a halt.
Put all of that in the context of inflation having been too high for too many years, and we have a compelling argument for a hike today.
Treasurer pins inflation blame on Middle East war
Treasurer Jim Chalmers was doing the media rounds this morning when he was asked about the persistently high inflation that will almost certainly lead to a rate hike this afternoon.He said that issue has been made much worse by the war in the Middle East.“We do have an inflation challenge in our economy, I think that’s self-evident,” Chalmers told Today.“That’s made much worse by the developments in the Middle East, this long war which is pushing up global oil prices and flowing through to all of our economies, pushing up inflation and interest rates right around the world.“We’re managing the budget in a responsible way, we’ve got spending as a share of the economy down considerably.”It’s worth noting a couple of things here.First: yes, the Iran war has undoubtedly had an inflationary impact on Australia. The price of oil has surged – a particularly sore point for an economy so reliant on diesel – but so too has that of other goods and commodities, including fertiliser, which has impacted the agriculture sector.However, if you take a look at the below graph, you’ll notice both headline and core inflation began their march out of the RBA’s target band last year – well before Israel and the US launched their surprise attacks on Iran.
What happens when?
As we mentioned in our last post, the Reserve Bank will announce its interest rates decision at 2:30pm (AEST) today.
An hour later, at 3:30pm, RBA Governor Michele Bullock will stand up for her regular post-meeting press conference where she’ll provide some more detail about the bank’s decision.
In the hour in between, we can expect to hear from Treasurer Jim Chalmers, as well as his opposition counterpart, Tim Wilson.
And assuming the RBA, as expected, hands down a hike, we’re also likely to hear from the major banks this afternoon as they announce when their customers are going to be impacted by higher rates – those statements will probably come in dribs and drabs from 2:30pm onwards.
Good morning
Hello and welcome to nine.com.au’s live coverage of the Reserve Bank of Australia’s September interest rates decision.
Borrowers have been handed a reprieve at each of the RBA’s last two meetings, with the official cash rate on hold at 4.35 per cent since May.
However, that run of pauses appears almost certain to come to an end this afternoon, when Governor Michele Bullock and her board widely expected to hand down a fourth interest rate hike of the year.
The decision will be published at 2:30pm (AEST), but there’s plenty for us to cover off between now and then, so stay with us as we bring you everything you need to know about today’s interest rates call.
Share a tip-off, video or photo with us
