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The Reserve Bank has given mortgage holders a reprieve from interest rate rises, holding the official cash rate steady at its Tuesday meeting.
In a decision that markets and economists believed was finely balanced, bank governor Philip Lowe said the board had decided to leave the cash rate at 4.1 per cent, at least until next month’s meeting.
Economic signals were mixed ahead of the RBA board’s meeting on Tuesday.Credit: Kate Geraghty
Monthly data shows inflation rose by 5.6 per cent in the year to May, down from 6.8 per cent the month before and well below December’s peak.
But core inflation remains high, above 6 per cent and well outside the Reserve Bank’s target range of 2 to 3 per cent.
Other data shows the RBA’s 12 rate rises in just over a year are starting to have an effect.
Retail spending is slowing, as more households feel the pressure of the repeated rate rises, while data from ANZ and Roy Morgan shows consumer confidence is at its second-lowest level in three decades.
ANZ senior economist Adelaide Timbrell said confidence fell last week ahead of the RBA meeting and was worst among those with mortgages.
“The four-week average level of confidence was the second-worst result in the last 30 years, second only to the first four weeks of the pandemic,” she said.
Separate research from Roy Morgan showed mortgage stress was at its highest level in 15 years, with an estimated 28.8 per cent of mortgage holders at risk of mortgage stress in the three months to May.
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