With much of the national and global attention on the endeavours of athletes competing at the Paris Olympics, the Reserve Bank of Australia (RBA) would be unwise to jump the starter’s gun in its race against inflation, says a leading finance brokerage.
Bell Partners Finance Managing Director, Mark Stevenson, said the RBA is weighing up whether to further increase the current official interest rate of 4.35 per cent due to another lift in quarterly inflation. The inflation rate rose to 3.8 per cent in the year to June, from 3.6 per cent in March, the first increase in 18 months.
But Mr Stevenson said the small spike in inflation should not prompt a panicked response from the central bank, with hundreds of thousands of mortgage holders struggling with the double whammy of 13 rate hikes in the past two years and cost-of-living pressures.
“It would definitely be a false start from the RBA if they responded to this latest rise in inflation by hitting borrowers with another interest rate hike,” Mr Stevenson said.
“The rate increases have had a big impact and continue to do so. Another increase will hurt badly. There have been reports that around half a million mortgage holders have already switched to interest only payments because they have been struggling to make ends meet.
“We would hope the RBA would continue to monitor the economic developments, particularly the impact of government stimulus from tax cuts and cost-of-living handouts.
“The RBA wants to reduce inflation back to its target range of 2-3 per cent, and we seem to be heading that way even with inflation rising from 3.6 per cent to 3.8 per cent.”
Mr Stevenson said Bell Partners Finance has been offering support to customers struggling to repay mortgages due to higher interest rates and cost-of-living pressures.
Bell Partners Finance has multiple locations throughout Australia, including Sydney CBD, Melbourne, Brisbane, Perth, Baulkham Hills, Newcastle and Tamworth
Further inquiries:
Steve Connolly Mb: 0414 296 379