Households can breathe a sigh of relief after the Reserve Bank board decided to hold interest rates steady at 4.1 per cent on Tuesday.
It is the first time since March-April last year that the RBA has left the cash rate unchanged at two consecutive meetings.
“In making its decisions, the board will continue to pay close attention to developments in the global economy, trends in household spending, and the outlook for inflation and the labour market.”Lowe said the board wanted more time to assess the impact of the 4 percentage points worth of interest rate rises since last May.
“There are also uncertainties regarding the lags in the operation of monetary policy and how firms’ pricing decisions and wages will respond to the slowing in the economy at a time when the labour market remains tight.”“Many households are experiencing a painful squeeze on their finances, while some are benefiting from rising housing prices, substantial savings buffers and higher interest income,” he said.
Chalmers said the government’s number one priority was doing what it could to take the edge off some of the cost-of-living pressures without adding to inflation.
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