By Tanya Faulkner
Mortgage holders can take a small sigh of relief this month in an environment of rising costs.
The Reserve Bank of Australia have held the cash rate for the fourth month consecutive, giving Victorian mortgagees a slight reprieve as the Christmas season draws nearer.
This means the cash rate will remain unchanged at 4.1 per cent for October.
However, the new RBA governor Michele Bullock said Australia isn’t out of the inflation woods yet, and could be subject to further interest rates in future.
“Some further tightening of monetary policy may be required to ensure that inflation returns to target in a reasonable timeframe.
“That will continue to depend upon the data and the evolving assessment of risks,” she said in her first official statement.
She said the ultimate goal for the board is to do what is necessary to return inflation to its target.
Ms Bullock said the outlook for household consumption still remains uncertain.
She said many households are experiencing a painful squeeze on their finances, while some are benefiting from rising housing prices, substantial savings buggers and higher interest income.
Earlier this year the Australian Financial Review showed that Australians over the age of 65 have continued spending on discretionary items, like holidays and airfares, while young adults were cutting back in all spending areas to save costs against the rising cost of living.
Despite there being a small increase in month-to-month inflation figures across the board last month, the RBA keeps its focus on core inflation when making its decisions.
By ignoring several sudden price movements last month, including holiday spending, fuel and produce, the annual growth of core inflation has continued to slow.
Unfortunately, while growth is slow, inflation continues to be stubbornly high in Australia, and Victorians need to be aware that they aren’t out of the woods yet.
