In this article:
“How long are they going to keep rates where they are?” That’s the big question Mark Bouris believes most Australians will be wondering, following the second consecutive month of the RBA holding the cash rate at 4.10%.
Appearing on Channel 7’s Sunrise, Mark was asked about the RBA’s plan for interest rates, considering that the RBA has continued to tell consumers that rates may continue to rise until inflation gets back to the “target range” of 2 – 3%.
Mark said he views the pause as “just a pause” and not a sign that the RBA is done with rate hikes just yet. He said not to read too much into this week’s rate pause: “I don’t have confidence in the fact that the services part of our inflation basket has stopped.”
“Services inflation is getting ahead of us, that is rents, restaurants, travel, accommodation, those sorts of things. So I think we’re still in that watch period.”
With the RBA still targeting an inflation rate of 2 – 3%, Bouris said that he disagrees with such a target, as it’s too “optimistic an outlook” in the short to medium term.
“I think [the RBA] should be looking at different rates, but they’re not going to do that. Bear in mind, the UK looks for 2%, the U.S targets 2%. So globally, there’s pressure on the Reserve Bank to get us in the 2 – 3% range. So they’re gonna go hard for it.”
“The real big question is not whether or not to put rates up again.”
“It is: how long are they going to hold these rates where they are? It’s extraordinary. We’ve had 400 basis points, or a 4% increase in interest rates since a year and a half ago. How long can this country sustain that without falling into recession?”
See Mark’s Reaction by clicking the video above.
