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RBA understands people are doing it tough, Bullock says
By Millie Muroi
Reserve Bank governor Michele Bullock has said she is “not ruling anything in or out” in terms of the RBA’s next move, after opening the floor to questions in the bank’s first press conference outside a crisis.
“Hi,” she said, cutting the tension in the room, before reflecting on the trajectory of interest rates which reached close to zero during the pandemic. “That was emergency settings, it was never going to stay there forever,” she said, noting the latest inflation figure “still has a four in front of it”.
Reserve Bank of Australia governor Michele Bullock today.Credit: Louise Kennerley
“The last two decades prior to the pandemic, inflation was about 2 per cent. It was in the background … people weren’t focused on it,” she said. “The board does understand that people are doing it tough, and that’s why it’s really important we get inflation down. We want it back in the background again, where people aren’t worrying about it.”
Bullock is speaking after the RBA kept interest rates on hold at 4.35 per cent at their first meeting of the year, broadly in line with market expectations.
Answering the first two questions on how markets had reacted to the decision, Bullock said the RBA was looking for data that convinced them that inflation was coming back towards its target range of between 2-3 per cent.
“Markets will make their own decisions, and they’re putting their money where their mouth is on those sorts of things,” she said. “But we’re not really driven by market pricing. Really, what’s important for us is looking at the economic data. We want to see inflation continuing to decline.”
The RBA’s central forecast is that inflation will return to the target in 2024, and reach the midpoint of the target range in 2026.
Police can’t rule out other suspects in grandmother’s alleged murder
By Cloe Read
Police have been unable to confirm if five teenagers charged following the alleged murder of grandmother Vyleen White were on bail at the time of the stabbing, and have not ruled out other people being involved.
White, 70, was killed while she was shopping with her six-year-old granddaughter at a shopping centre in Ipswich, near Brisbane, on Saturday.
Her car, a Hyundai Getz, was later allegedly stolen from the centre, south-west of Brisbane, and police launched a manhunt.
Detectives charged a 16-year-old Bellbird Park boy with murder, unlawful use of a motor vehicle and stealing.
Four other teenagers, two 16-year-olds and two 15-year-olds from the Ipswich region, were charged with offences including unlawful use of a motor vehicle.
Detective Acting Superintendent Heath McQueen said he could not rule out more people being charged.
“If we identify any other persons that may have been involved in this matter peripherally, before or after this offence, you can be assured we will apprehend them, and we will put them before the judicial system,” he said.
Read the full story by Cloe Read here.
Opinion: Nick Scali, Myer results prove consumers are still spending
By Elizabeth Knight
Investors were overjoyed today when two of the canaries in the retail industry’s coal mine, Myer and Nick Scali, proved to be alive and already limbering up for recovery.
As Elizabeth Knight writes, these two retailers have come through the cost-of-living mire and appear to be tunnelling out the other side – despite retail sales down a diabolical 2.7 per cent in December, and consumer confidence metrics that support the same view.
Myer shares soared after a trading update beat market expectations.Credit: Will Willitts
If Nick Scali and Myer are representative of the industry, then “as bad as it gets” may not be all that bad.
While the positive results buoyed the market, “discretionary retailers and investors understand that the real shot in the arm needed to kickstart sales is a decline in interest rates”.
“Tuesday’s decision by the Reserve Bank to keep rates on hold is the next best thing,” Knight writes.
Read more here.
Key takeaways from the RBA’s statement on monetary policy
By Rachel Clun and Shane Wright
In a collective statement after the board’s first-ever two-day meeting, it warned it is prepared to keep raising interest rates to combat high inflation.
But in its statement on monetary policy accompanying the rates decision, the bank also released forecasts for the economy that assume rates will be lower by the year’s end.
Economics correspondents Shane Wright and Rachel Clun have pored through that document. Here’s their five key takeaways:
- The bank is still worried about inflation pressures across the economy.
- The economy is going to slow rather abruptly over the next few months as the combination of high interest rates, the cost-of-living and high personal taxes bite.
- People are adapting to high inflation by changing their shopping patterns, looking for bargains or replacing a trip to Los Angeles with one to Port Macquarie.
- Don’t expect the surge in rents to end any time soon. The bank says “ongoing weakness in dwelling investment” will keep the rental market for some time yet.
- Even the RBA believes it will be cutting interest rates this year. All of its forecasts are predicated on the assumption that by year’s end, the cash rate will be lower at around 3.9 per cent.
You can read their full analysis here.
Shadow treasurer won’t elaborate on Coalition’s alternative tax plan
By Angus Thomson
Earlier, Reserve Bank governor Michele Bullock said she did not believe the Albanese government’s changes to the stage 3 tax plan would have an impact on inflation.
“The bottom line really is that … it’s same amount of money being handed to households, distributed slightly differently,” she said.
Shadow treasurer Angus Taylor during question time today.Credit: Alex Ellinghausen
Appearing on ABC TV a short time ago, shadow treasurer Angus Taylor was asked whether that outlook informed the Coalition’s decision today to support the revised plan.
Taylor said Labor had spent $209 billion since it came to power and “there is no way that will not be adding to inflation”.
“The real question is how do you reverse that, there is no plan to reverse the 12 interest rate increases, the huge hikes and prices,” he told the ABC’s Greg Jennett.
Taylor would not reveal the details of the Coalition’s alternative tax reform policy, which Opposition Leader Peter Dutton said would be unveiled before the next election and give bigger tax cuts to workers.
“What I will say is we do believe in rewarding hard-working Australians who want to get ahead,” he said. “Tax reform like the stage 3 tax cuts gives you a strong low inflation economy and that is why we will take forward strong tax reforms to the next election.”
Bullock says RBA can do little to bring down insurance costs
By Millie Muroi
Michele Bullock has also fielded questions about the impact of monetary policy on insurance premiums, the new format of board meetings and balancing unemployment with getting inflation under control.
Asked by this masthead’s economics correspondent Rachel Clun about the impact of the RBA’s decisions on bringing down insurance costs, Bullock said the bank had little impact.
Climate change is posing a challenge to the insurance industry, Bullock says. Credit: Nick Moir
“Well, the insurance sector has got its own issues going on,” she said. “And there’s not a lot that monetary policy can take do about that. Insurance costs and the way insurance is moving in relation to climate change, and in relation to the effect on premiums and profit margin rebuilding … these are things monetary policy can’t do anything about.”
One drawback of higher interest rates and slower economic growth can be a slowdown, or even paring back of employment gains made in the past few years.
Bullock said employment growth was slowing but still in positive territory. “That is the balance we are trying to achieve,” she said.
Bullock was also asked her thoughts on the new frequency and format of RBA meetings.
“I think that the board is conscious they’re meeting less often, but I think that gives them a bit more opportunity to think a bit more broadly,” she said. “So I’m happy with the way things went.”
Bullock says we’re spending on what’s important, Taylor Swift tickets included
By Angus Thomson and Millie Muroi
Now for an absolute ripper of a question from one of our own, senior economics correspondent Shane Wright:
“Taylor Swift inflation hit my family again last night, when my daughter’s tapped the bank of mum and dad to pay for some newly announced releases. Is the huge interest in Ms Swift about to hit our shores an example of the type of services inflation that you’ve mentioned?”
Bullock said she “knows all about Taylor Swift inflation”, but isn’t concerned.
“On Taylor Swift tickets, I’d say that from my own experiences that my kids put money away to do it,” she said. “People are deciding what’s really important to them, and what’s not as important and clearly for a lot of people, Taylor Swift is very important.”
American singer Taylor Swift.Credit: AP Photo/Chris Pizzello.
She described services inflation as rising prices for “anything that you can’t drop on your foot”, such as life insurance, electricity and yes, the astronomical cost of concert tickets.
Bullock said monetary policy – how the RBA sets interest rates, for example – doesn’t directly impact on that form of inflation, but it does limit demand and therefore the ability of businesses to pass on rising costs to consumers.
Forecasts are an assumption, not a commitment, Bullock warns
By Millie Muroi
Bullock has emphasised the bank’s forecasts are an “assumption”, not a commitment as the Reserve Bank tackles inflation.
“It isn’t even an expectation,” she said. “It’s something to work with. As we move out with our forecast, it gets more uncertain.”
Asked to rate her confidence in getting inflation sustainably within target, Bullock said that there were signs the economy was on the “narrow path” aimed for by the RBA.
“I think the signs are good, but we’ve got to be very vigilant.”
Stage 3 tax changes won’t impact RBA forecasts
By Millie Muroi
Asked about productivity improvement, which the Reserve Bank has consistently stated as an important factor in bringing inflation down, Bullock said she was confident that productivity would return to some sort of long run trend, but that concentrating on quarterly movement was distracting.
“I think you’ve got remember that during the pandemic productivity estimates were all over the shop. They were everywhere,” she said. “Ultimately, I think productivity is going to return to the Australian economy … technology will help there’s business investment going on, I think these things are all positive for productivity.”
Asked about tax cuts and how it could fuel demand and inflation, Bullock said it wasn’t a material issue.
“The bottom line really is that … it’s same amount of money being handed to households, distributed slightly differently,” she said. “We don’t think it has any implications for our forecast.”
RBA understands people are doing it tough, Bullock says
By Millie Muroi
Reserve Bank governor Michele Bullock has said she is “not ruling anything in or out” in terms of the RBA’s next move, after opening the floor to questions in the bank’s first press conference outside a crisis.
“Hi,” she said, cutting the tension in the room, before reflecting on the trajectory of interest rates which reached close to zero during the pandemic. “That was emergency settings, it was never going to stay there forever,” she said, noting the latest inflation figure “still has a four in front of it”.
Reserve Bank of Australia governor Michele Bullock today.Credit: Louise Kennerley
“The last two decades prior to the pandemic, inflation was about 2 per cent. It was in the background … people weren’t focused on it,” she said. “The board does understand that people are doing it tough, and that’s why it’s really important we get inflation down. We want it back in the background again, where people aren’t worrying about it.”
Bullock is speaking after the RBA kept interest rates on hold at 4.35 per cent at their first meeting of the year, broadly in line with market expectations.
Answering the first two questions on how markets had reacted to the decision, Bullock said the RBA was looking for data that convinced them that inflation was coming back towards its target range of between 2-3 per cent.
“Markets will make their own decisions, and they’re putting their money where their mouth is on those sorts of things,” she said. “But we’re not really driven by market pricing. Really, what’s important for us is looking at the economic data. We want to see inflation continuing to decline.”
The RBA’s central forecast is that inflation will return to the target in 2024, and reach the midpoint of the target range in 2026.
Watch live: Bullock explains Reserve Bank interest rate decision
Reserve Bank governor Michele Bullock is explaining the board’s decision to hold interest rates steady.
Watch below.
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2024-02-06 05:35:46Z
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