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Home buyers have won another month’s reprieve from interest rate rises amid growing signs the economy is slowing in response to the Reserve Bank’s previous rapid increases.
In one of his final acts as Reserve Bank governor, Philip Lowe helmed Tuesday’s meeting where the board kept the official cash rate at 4.1 per cent for the third month in a row.
The Reserve Bank started aggressively raising interest rates in May last year.Credit: Dominic Lorrimer
The Reserve Bank started aggressively raising interest rates in May last year, taking the official cash rate from a record low 0.1 per cent to 4.1 per cent in June this year in a bid to rein in inflation. The string of rate rises has pushed up monthly repayments on an average $600,000 mortgage by more than $1350.
Recent economic figures show those rate rises are working. Monthly inflation fell to 4.9 per cent in July, down from a December peak of 8.4 per cent, according to the Australian Bureau of Statistics.
Household spending data from the ABS this week showed consumers have continued to cut spending, particularly for non-essential items, while separate figures on business indicators showed company profits fell 13.1 per cent in the three months to the end of the financial year.
Economists widely expected another rate pause, saying the recent economic figures were in line with the central bank’s own forecasts for the economy to slow without entering a recession.
On Wednesday, Treasurer Jim Chalmers will release the latest economic growth figures, which will show how the Reserve Bank’s monetary policy tightening affected the economy through to the end of June.
Lowe will give his last speech as governor on Thursday, titled “Some closing remarks”, before handing the Reserve Bank’s top job to Michele Bullock, who is currently deputy governor, on September 18.
More to come
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