RBA “can’t leave rates high for very long”

13th Jul, 2023 | In The News, Articles, Interest Rates

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It was a busy appearance for Mark Bouris on Sky News as he discussed a number of pressing issues that all homeowners are facing.

Two more rate rises. A new Governor of the RBA. Interest rate reductions in just 12 months.

It was a busy appearance for Mark Bouris on Sky News as he discussed a number of pressing issues that all homeowners are facing.

Interest rates were front of mind with Bouris saying that the “money markets” are predicting that Aussie households could be in for “another rate rise, definitely one more rate rise in the next two months. There’s an even money chance of two rate rises.”

Of course, money markets are “often wrong”, said Bouris, but those some markets are “also saying that they expect to see somewhere between three and five rate reductions in a year’s time.”

A year’s time is still a while away for homeowners who have experienced rapid increases to their monthly mortgage repayments, particularly those borrowers who took out a fixed rate between two and three years ago.

Bouris said that Australians need to do their best to not let the negativity and rising rates “get you down.”

“You only need to hang in there for 12 months because the amount of money Australians have borrowed relative to history, and given interest rates are where they are, [the RBA] can’t leave [rates] high for very long! Very long being 12 months, I think. But hang in there.”

A new RBA governor?

The current ‘boss’ of the RBA, Dr Philip Lowe is nearing the end of his term, with his contract due to expire in September.

A few potential candidates have been circulating in the media, with Bouris asked about Jenny Wilkinson, an experienced public servant who is currently Secretary at the Department of Finance.

He said, “academically, Jenny is a good replacement, who has good economic experience in her various roles.”

“I think this is going to be a political appointment anyway. At the end of the day, even though [the RBA] is an independent body, the new Governor is going to be appointed by Labor.”

“So I’d say that whoever’s got the best labor values is probably the most likely person.”

“I wouldn’t be surprised at all if it was a female appointment, because we need to see a little bit more female prominence in these particular types roles. But I’m also hearing Michelle Bullock, who’s currently the Deputy Governor, is a really good chance.”

Bouris was asked whether any new Governor coming in will be in for a tough ride considering the public sentiment towards the RBA currently. He was inclined to view the role in a different light:

“I’m going to look in a different way. Whoever comes in might say, ‘you know what, the previous guy did too many rate rises. I’m just going to let it sit and roll for a while.’ And in 12 months time, when they start bringing rates down…they can say, ‘look what I’ve done, I’ve rescued Australia.’ Maybe that’s a better way to look at it.”

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