Reserve Bank governor Michele Bullock has issued a warning to home buyers and businesses regarding the likelihood of further interest rate pain in the future. Bullock emphasizes that inflation is being fueled by strong demand for various services and goods, from haircuts to dining. Despite acknowledging the financial strain on households with large mortgages, Bullock reiterates the commitment to using the “blunt tool” of interest rates to tackle inflation for the collective welfare of Australians.
During a major address to the nation’s business economists, RBA governor Michele Bullock highlighted the homegrown nature of the inflation challenge faced by the central bank. She emphasized that the RBA will continue to use its primary tool of interest rates to combat the persistently high inflation. Bullock also underscored the bank’s obligation to prioritize economy-wide outcomes and the well-being of all Australians.
The prospect of enduring interest rate hikes has raised concerns about the impact on ASX shares. Investors and ASX shares have felt the impact of the RBA’s resumption of its interest rate hiking campaign. The market had been hopeful for an end to the rate hikes necessary to tame inflation but has faced the reality of the continuing campaign. The ongoing rise in rates and its potential effect on ASX shares remains a topic of interest and concern for investors.
Michele Bullock’s unwavering stance on using interest rates as a tool to combat inflation reflects the RBA’s commitment to managing the economic challenges faced by households and businesses. The implications of this approach on the financial well-being of Australians and the performance of ASX shares continue to be closely monitored amid the evolving economic landscape.
