In a move that should bring relief to mortgage holders the Reserve Bank of Australia (RBA) has decided to pause interest rates at 4.1 per cent.
The pause follows last month’s decision to increase the official cash rate which welfare advocates say made existing cost of living pressures even worse.
Despite the pause, the RBA’s Governor Phillip Lowe says there might be further rises if the situation calls for it.
Managing Director of Indigenous-owned consultancy firm Malu.net.au, Matthew Jones believes public outcry and the economic data may have swayed the RBA’s decision.
“In short there is a huge number of fixed rate mortgages which are rolling over into variable rate mortgages and that has occurred in the first half of the year.
And so those mortgage holders are going to be experiencing extreme cashflow pressure and that is already feeding into the broader economy with consumer and business sentiment at record lows, consumers keeping their wallets shut tighter, and unemployment ticking up higher.
So It’s a very prudent decision made by the RBA”
Mr Jones says the economy is at a tipping point.
“I think it is likely that we will see another 25 basis point rate rise this year, the question is now because the economy is very much at a tipping point whether a further rate rise would be enough to induce a recession.
They probably would avoid it because of the (federal) government’s migration policy, however it’s likely that would have a per capita rescission later this year or early next year.”