Reserve Bank issues fresh interest rate rise warning to Aussies in Philip Lowe’s last days in power

The Reserve Bank almost raised rates again this month and has warned that more rate hikes may be needed in the coming months.

With a warning that the Australian economy is on track to slow more than previously expected, minutes from July’s board meeting show that the central bank was still considering raising cash rates by a further 25 basis points in July.

The July meeting was the last before it was announced that Philip Lowe would no longer serve as governor starting in September and would be replaced by Vice Governor Michele Bullock.

At the meeting, the board finally voted to keep interest rates stable at 4.1 percent, with the minutes of the meeting showing that the full effect of aggressive monetary policy over the previous 14 months had not yet been fully seen.

The board also acknowledged that inflation was declining; and that the slowdown in economic growth worked to better match supply and demand, which “over time would work to lower inflation.”

The bank warned that the economy could slow more than expected, with members noting that there was ‘significant uncertainty’ about the resilience of household consumption and that ‘pressure’ on many households’ finances could slow consumption even further .

In the end, the board ruled that the case of keeping the cash rate stable was “the strongest.”

“Given both the uncertainty surrounding the outlook and the significant rise in interest rates to date, members agreed to keep cash rates stable and reassess the situation at the August meeting,” the minutes said.

“Members agreed that some further monetary policy tightening may be necessary to bring inflation back to target within a reasonable timeframe, but that this will depend on how the economy and inflation evolve.”