<?xml version="1.0" encoding="ISO-8859-1"?> <docID>334248</docID> <postdate>2024-11-28 20:02:36</postdate> <headline>Top bank chief reveals why rates are still on hold</headline> <body><p><img class="size-full wp-image-334249" src="https://citynews.com.au/wp-content/uploads/2024/11/20241105182761683122-original-resized.jpg" alt="" width="900" height="600" /></p> <caption>RBA boss Michele Bullock has lifted the lid on why the bank is yet to cut interest rates. (Bianca De Marchi/AAP PHOTOS)</caption> <p><span class="kicker-line">By <strong>Poppy Johnston</strong> in Canberra</span></p> <p><strong>Reserve Bank chief Michele Bullock has used a speech to spell out why Australia's central bank is yet to cut interest rates despite easing starting in Canada, New Zealand and other peer economies.</strong></p> <p>Central banks already cutting interest rates are only softening interest rate brakes rather than hitting accelerators, Ms Bullock says, while explaining why borrowers are waiting longer for repayment relief.</p> <p>"Recently, I have been asked why other central banks are lowering interest rates," she said during the CEDA's Annual Dinner address.</p> <p>"To explain this, I need to describe what the board is trying to achieve and ways in which we seem to be a little different from some other peer economies."</p> <p>All central banks care about inflation and the jobs market, Ms Bullock said, but Australia's emphasis on the latter stopped interest rates going so high in the first place.</p> <p>"Indeed, Australia's labour market conditions appear unusually tight, relative to those in other peer economies," she said.</p> <p>"Conditions in labour markets in those economies have eased significantly and unemployment has increased, such that labour markets are now assessed to be close to balance or have spare capacity."</p> <p>Australia's interest rate has remained stuck at 4.35 per cent for the past 13 months as households navigate a cost-of-living crisis.</p> <p>Most economists don't expect a rate cut until at least February.</p> <p>Australia's unemployment rate has held at 4.1 per cent for three months in a row and remains low compared to historical norms.</p> <p>In addition, monthly job creation has consistently beat expectations.</p> <p>"Given the tightness in Australia's labour market, along with our assessment that the level of demand still exceeds supply in the broader economy, we expect it will take a little longer for inflation to settle at target in Australia," Ms Bullock explained on Thursday.</p> <p>Further, central banks cutting interest rates are only planning to remove "some" restrictiveness.</p> <p>"That is, central banks globally are still pushing against high inflation despite pulling back on the extent of restrictiveness somewhat," Ms Bullock said.</p> <p>Her remarks follow October inflation numbers, which are not as comprehensive as quarterly figures but still provide insights into price pressures.</p> <p>The monthly gauge's measure of trimmed mean came in at 3.5 per cent, a level economists viewed as still too elevated to be consistent with a rate cut at the next RBA meeting in December.</p> <p>Yet with inflation broadly travelling in the right direction, expectations are the next move will be down though the timing of cuts remains uncertain.</p> <p>Of late, markets have pushed out expectations for the first cut from February to March.</p> </body>