RBA cautioned against rate hikes

RBA Cautioned Against Rate Hikes

Mark Stevenson, Managing Director at Bell Partners Finance (now Evolve Lending & Finance), was featured in Australian Broker News in August 2024 weighing in on whether the Reserve Bank should respond to a fresh uptick in inflation with another interest rate increase.

At the time, the cash rate sat at 4.35% following 13 consecutive hikes over the preceding two years. When inflation edged back up from 3.6% to 3.8%, speculation re-emerged about whether the RBA would tighten further. Mark’s view was clear: another increase would cause serious harm to mortgage holders who were already under considerable pressure.

He pointed to the volume of borrowers who had resorted to switching to interest-only repayments as evidence of the strain already in the system, noting reports that around half a million households had made that shift simply to keep up. In that context, a reactive response to a single inflation reading would, in his words, be a false start, one that punished borrowers before the full effect of government stimulus measures such as tax cuts and cost-of-living support payments had been allowed to flow through the economy.

Mark’s broader point was about patience and proportionality. The RBA’s target of returning inflation to the 2% to 3% band appeared to be within reach even without further intervention, and he urged the board to monitor economic developments carefully before reaching for another rate hike. Bell Partners Finance was actively working with customers navigating the pressures of higher rates and increased living costs across its locations throughout Australia.

If you are feeling the pressure of higher repayments, contact Evolve Lending & Finance to explore your options and find out whether a better deal is available to you.