More bad news for millions of Aussie borrowers as RBA chief makes pivotal rate cuts decision

The Reserve Bank has declared interest rates won’t be slashed in Australia like in other nations because inflation is still too high.

While underlying inflation has eased, Governor Michele Bullock says there needs to be more evidence that will be stay at the mid-point of its two to three per cent target.

The RBA left the cash rate on hold at 3.85 per cent in July, surprising financial markets, but Ms Bullock said borrowers expecting big rate cuts in 2025 and 2026 would be disappointed.

‘Interest rates in Australia did not rise as high as they did in some other economies, and so we may not need to lower them as much on the way down,’ she told the Anika Foundation Fundraising Lunch in Sydney on Thursday.

‘The board continues to judge that a measured and gradual approach to monetary policy easing is appropriate.’

Australia’s cash rate is much higher than Canada’s 2.75 per cent and New Zealand’s 3.25 per cent.

This is despite Australian underlying inflation in May falling to just 2.4 per cent.

Ms Bullock said more comprehensive June quarter consumer price index data, due out next week, would have to show underlying inflation being much lower than the March quarter’s 2.9 per cent.

‘We expect trimmed mean inflation to fall a little further in the June quarter in year-ended terms,’ she said.

‘However, the monthly CPI Indicator data, which are volatile, suggest that the fall may not be quite as much as we forecast back in May.

‘We still think it will show inflation declining slowly towards 2.5 per cent, but we are looking for data to support this expectation.’