Finance Minister Katy Gallagher said the pause would provide many households with much-needed relief but inflation remained too high.Credit:Alex Ellinghausen
“Anthony Albanese and Jim Chalmers were elected to ensure no one was left behind. Their failure to either rein in the RBA or start doing any of the heavy lifting makes them complicit,” he said.
“If Australia is smashed into a recession,it will be Labor’s recession.”
Lowe said the bank did not expect the economy to go backwards as inflation continued to fall,but acknowledged the path to achieving that goal was narrow and complicated by household consumption.
“The board remains resolute in its determination to return inflation to target and will do what is necessary to achieve that,” he said.
Lowe’s seven-year term as governor ends in September,and Chalmers has previously confirmed he willreveal his decision on the position in July as he works to enact the changes recommended in the recent RBA review.
Oxford Economics Australia’s head of macroeconomic forecasting,Sean Langcake,said the relief from rate rises was likely to be temporary,as the RBA would be sensitive to any surprises in the quarterly inflation data due later this month. He expects two further rate rises.
“The board statement made a rather compelling case to hike rates further,noting that inflation remains too high and the labour market is still very tight,” he said.
AMP Capital chief economist Shane Oliver said the pause was more than warranted given the looming risk of a recession.
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“We think that the RBA has done more than enough on rates to slow the economy and bring inflation back to target,” he said.
EY Oceania chief economist Cherelle Murphy said quarterly inflation figures due at the end of the month would be crucial to the RBA’s next interest rate decision.
“This will help the board decide whether the declining rate of inflation is swift enough to move inflation back towards the 2-3 per cent target band within a reasonable time,” she said.
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