Opposition leader Peter Dutton says he is hopeful the Reserve Bank will cut interest rates at its meeting next week, but then warned there was a danger in cutting rates too early.
Financial markets expect the RBA board to use its February 17-18 meeting to slice the official cash rate by a quarter percentage point to 4.1 per cent, the first cut to rates since November 2020.
Expectations of a rate cut are high after better-than-expected inflation figures last month suggested price pressures are easing. This week, Westpac economists forecast inflation to ease even more rapidly, suggesting overall prices could have fallen in January.
Dutton addresses the media in Canberra.Credit: Alex Ellinghausen
Dutton told a press conference that he believed Australian mortgage holders deserved a rate cut, but then noted the risk that any relief may be short-term.
“On interest rate cuts, my hope, for the sake of families, the small businesses, that there is an interest rate cut,” he said.
“That’s a decision for the Reserve Bank governor, and she shouldn’t feel pressured one way or the other, because you can cut rates and then find that they’ve been cut too early, then the Reserve Bank will have to increase rates later on, and that’s obviously a real concern to economists and to families as well.”
Dutton said ultimately bank governor Michele Bullock would make a decision in the country’s best interest.
However, the decision is left to the board rather than the governor. Reforms to the bank, introduced over the past year and including the creation of an interest rate setting committee, have been aimed at ensuring the entire board decides on interest rate settings.
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