Michele Bullock has issued a word of caution to the Australians hoping for an interest rate cut.
The Reserve Bank governor said while she wants to provide relief to households struggling with mortgage repayments, bringing the CPI back to target was the bank's immediate priority, saying "inflation is actually the thing that is hurting absolutely everyone".
"But what I want to emphasise to people is that the precondition for that is that inflation needs to be coming back down and be sustainably back in the band on the board's timetable, because if it's not, we can't remove the restrictiveness of monetary policy."It won't be good for those people on mortgages, because inflation will still be high.
But while the remaining per cent or so of the CPI appears to be the most difficult to bring under control, Bullock said she doesn't expect last month's federal budget – and its $300 in energy relief for every household – to add to inflation."I think the quantums are small enough that they aren't really going to … When you think of that $300, are people going to go out and spend up big on that? No, I don't think so," she said.
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