“We will continue to engage and be focused on cost-of-living relief because we know that that is the No.1 issue facing Australians,and we will continue to provide that support,” he said at the tail end of his four-day visit to China on Tuesday.
The central bank revised up its forecasts for inflation,saying it was now expected to reach 3.5 per cent by the end of 2024,rather than 3.3 per cent,before easing to the top of its 2-3 per cent target range by the end of 2025.
Inflation rose by 5.4 per cent in the year to September,and underlying inflation has been stronger than expected due to strong price increases across a range of services.
CreditorWatch chief economist Anneke Thompson said Bullock made it clear she had a low tolerance for letting inflation stay higher for longer than currently expected.
“Unfortunately,the grim reality is the goods or services that are still recording high levels of inflation are not under any demand pressure ... therefore this cash rate rise will have little impact on the prices of rents,fuel,insurance and utilities,” she said.
Deloitte Access Economics partner Stephen Smith said the RBA backed the wrong horse in its decision to lift rates on Melbourne Cup Day.
“It’s the rate rise the Australian economy didn’t need,” he said.
“With increases to the cash rate only effective at reducing demand-led inflation,it is hard to see what a November rate hike achieves other than making it harder for Australians to pay their mortgage in the lead-up to Christmas.”
Other economists,including KPMG chief economist Brendan Rynne,said the RBA’s move was understandable as home prices continued to rise,households drew on savings and the unemployment rate remained around 48-year lows.
“These factors combined are likely to hold up inflationary pressures in the short term,so bumping the cash rate up by another[0.25 percentage points] is a ‘belts and braces’ setting to ensure the pathway back to the target band is achieved in a ‘reasonable timeframe’,” Rynne said.
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Bullock said any further rate rises would depend on upcoming economic data and issues including developments in the global economy.
“Whether further tightening of monetary policy is required to ensure that inflation returns to target in a reasonable timeframe will depend upon the data and the evolving assessment of risks,” she said.
Treasurer Jim Chalmers said he understood the rate rise would be difficult for mortgage holders but the government was doing its part to get inflation down,including by saving most of the$22.1 billion surplus,targeting cost-of-living relief and investing in affordable housing.
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“This[rate rise] will make life harder for people who are already doing it tough,” he said.
Greens senator Nick McKim said the rate rise would cause enormous hardship.
“Raising interest rates won’t bring petrol prices down and it may even drive rents up,” he said.
Opposition finance spokeswoman Jane Hume said it would be a tough Christmas for families,particularly those with mortgages.
“Today,the Reserve Bank sent a very,very clear message to the Albanese government and that was that they must do more to bring inflation down,” she said.
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