Bullock says Australians are ‘poorer’ after RBA rate hike
Speaking about the impact of the Middle East conflict, Bullock says:
Australians are poorer because of this shock to oil prices and energy prices and all the other commodity prices that are being impacted. So we are poorer, and there is no way out of that. The trade-off is much worse.
Key events
Jane Hume, deputy leader of the federal opposition, say the federal government’s spending is one reason inflation is “too high”.
Speaking to the ABC, Hume said Australia was a more “vulnerable economy” because of decisions the government had made:
Unless you can get inflation under control, you are leaving our economy and every single citizen exposed to shocks from overseas and that’s what’s happening right now.
Luca Ittimani
RBA warns government spending must be targeted ahead of budget
A week out from the federal budget, the RBA governor has warned the government to be “careful” its spending doesn’t add to inflation.
Michele Bullock has repeatedly avoided commenting on government spending in recent years. But when asked today, she told reporters the private sector and the public sector would both need to cut their spending to avoiding locking in higher prices set by businesses.
During her press conference, Bullock suggested that extended to cost-of-living relief:
The extent to which government make up the shortfalls for households by giving them more money, it makes it harder to dampen demand …
Fiscal policy has many more things that it can do but it has to be careful, I guess, in the sense that it needs to be targeting where it’s most needed … You can’t just go out there and add to demand.
Bullock said there was a role for governments specifically to cut back on spending.
When governments are spending a lot of money and we’re running up against capacity constraints, then they do need to think about whether or not there’s ways they can help the inflation problem by looking for ways to constrain demand.
However, Bullock was quick to say the treasurer, Jim Chalmers, was on the same page, adding she was not calling for fiscal settings to take the lead on fighting inflation and state government spending also played a role.
Tory Shepherd
‘Jews get abused and that’s just the way it is,’ witness tells antisemitism inquiry
Kovi Paneth told the royal commission he was worried about the “normalisation” of antisemitism after he was abused on a train and nobody intervened:
In Australia, Jews get abused and that’s just the way it is. And that’s the part that was very, very upsetting to me, in that it’s just … normalised in society and quite acceptable.
He said his daughter was asked if she was a “dirty effing Jew” while in a bar. She tried to record the man, then his friend grabbed the phone and said “ignore him, he’s drunk, I’m sure not all Jews are dirty effing dogs”.
He said he wouldn’t let his wife or children walk alone at night now:
Since October 7, antisemitism has gotten real … it’s gotten violent.
AAO’s relative was killed in 7 October attacks on Israel, and since then she hasn’t worn anything that publicly identifies her as a Jew.
She told the inquiry she had been at the Australian Open at Rod Laver Arena, when a woman they didn’t know said to them that “the job that they did in Bondi wasn’t good enough, and that Jews are the worst, and they kill babies”. “It was very deep-seated, the hatred,” she said.
The woman would not have known she was Jewish, she said. She gave a statement to the police, who removed the woman from the tennis.
Tory Shepherd
Vic Alhadeff tells royal commission antisemitism is ‘front and centre in our ecosystem’
Returning to the antisemitisim royal commission, Dr Vic Alhadeff (you can see his impressive achievements here) posed this question to the inquiry: “Is it too late to repair the fracturing of the social fabric in this country?”
He listed a range of ways in which Jewish people have been vilified or made to feel unsafe.
Antisemitism, he said, had morphed from being “at the edges” of society to “front and centre in our ecosystem”.
He said he had met with three high school students who had posted on Twitter that it was time to “burn the Jews” and to “gas the Jews”, and had “posted a photograph of themselves with their arms in the form … of a swastika”.
He took along a photo of his grandparents, who were murdered in the Holocaust, in order to educate them.
He also confronted a priest who told a school congregation that Jews were “a jealous people”, referred a driver whose number plate had Nazi connotations to the police, and experienced road rage from a man who called him an “effing South African Jew”.
He also told the commission about going to the Sydney Writers’ festival last year and hearing an audience member asking about the “elephant in the room … the Jewish tentacles”, with no one rebutting that trope.
He also talked about his work campaigning for tougher anti-hate laws, and his disappointment in the “silence” and indifference from an interfaith group on the Bondi attack. One member, he said, held him responsible for Israel’s actions in Gaza:
This issue goes to one of the issues which is information a lot of the antisemitism which has been rocking this country … for the last two and a half years, holding Jewish Australians accountable for what is taking place on the other side of the world.
Jewish Australians feared there would be “another Bondi”, he said.
The royal commission was an opportunity to push antisemitism “back to the margin” and repair “social cohesion”, he said.
Luca Ittimani
RBA governor says ‘we still have no idea’ when Middle East war will be over
Asked by Guardian Australia’s Patrick Commins about the chance the RBA’s prediction is too optimistic, Michele Bullock said:
It may well be, certainly. When I stood here at March, I think the war was maybe a week or two old and everyone was thinking it’ll be over in a couple of weeks. It isn’t. We’re still here. We still have no idea.
The bank was alert to the chance of a bigger rise in unemployment and would “wait and see” as it considered another interest rate rise, Bullock said.
She said:
We don’t know one reason for deciding to increase interest rates, to give ourselves space now to sit and see what happens, whether the baseline turns out or it’s an adverse scenario. That was part of the thinking, I think, in terms of increase now and then give yourself space.
Bullock stressed that low-income Australians are the ones most affected by inflation:
She said:
The people who are most impacted by inflation are the most vulnerable. The people on the lowest incomes, they’re the ones who they don’t have savings, they don’t have earnings from interest or anything like that … they’re just getting hit by inflation.
Luca Ittimani
Price rises due to global fuel price shock ‘completely out of our control’: Bullock
Bullock says prices will rise regardless of what the central bank does with interest rates.
She says Australia’s economy has been irreparably hit by the global fuel price shock, caused by the US-Israel war on Iran. She added:
These interest rate rises are not going to do anything for inflation in the next six months. That’s done and dusted. We know that prices are coming through.
Bullock said the rate rises aimed to prevent further secondary price rises and offer households and businesses certainty that inflation would slow. But she went on:
It’s not something we can offer in the next 12 months. This is a shock completely out of our control.
Bullock says Australians are ‘poorer’ after RBA rate hike
Speaking about the impact of the Middle East conflict, Bullock says:
Australians are poorer because of this shock to oil prices and energy prices and all the other commodity prices that are being impacted. So we are poorer, and there is no way out of that. The trade-off is much worse.
Luca Ittimani
RBA governor warns more interest rate rises could come
Bullock says more interest rate rises may be needed after today’s, which was the third rise this year.
She says rate hikes to date won’t be able to stop fuel prices from driving up inflation. They’re instead aimed at cutting spending to stop broader prices from rising after the oil price spike ends.
Bullock says:
In many firms that are facing cost pressures, they’re looking to increase prices of their goods and services. If left unchecked, higher costs get embedded into price and wage setting decisions. These second round effects could lead to even higher and persistent inflation, and if so, would require even more tightening in monetary policy to get inflation under control.
However, she suggested there may not be a rush to raise rates again and the RBA had time to see how the economy handles the oil shock:
The board now judges the level of the cash rate to be a bit restrictive, which will help to address the risk that inflation will be higher and more persistent once the current prices shock passes through the economy. This gives the board space to see how the conflict plays out and the response of Australian households and businesses to the shock.
RBA governor: ‘We must get on top of inflation now’
Michele Bullock, the governor of the Reserve Bank of Australia, is speaking about today’s rate hike.
Speaking to reporters in Sydney, Bullock acknowledges Australian households are facing “difficult times” but stresses the need to reduce inflation:
Inflation in Australia was already too high before the recent conflict in the Middle East began … We must get on top of inflation now so it doesn’t get away from us.
Tory Shepherd
Antisemitism inquiry hears about social media abuse towards Jewish school students
Returning to the antisemitism royal commission, school principal Jeremy Stowe-Lindner told the inquiry that social media abuse towards students at his Melbourne Jewish school has become so bad they have had to set up a system to block slurs.
He said before 7 October there would be an antisemitic incident once every few months at Bialik College, but since then, there had been an “avalanche of experiences”.
Those experiences include antisemitic graffiti and stickers, and about 50 potentially reportable incidents such as people driving by shouting abuse, and a student being spat on. He said:
We can’t go into the CBD in Melbourne any more in school uniforms … We have had Hitler salutes and Jewish slurs.
He personally has been called a Nazi and a fascist and has had to upgrade his home security. The school has had to increase its security, paid for by parents through a security levy, and security staff now regularly scan the area around the school for antisemitic graffiti and stickers, he said.
He wanted the commission to recommend some sort of systemic funding for Jewish security, because currently it is “a tax on Jewish identity … a tax on Jewish people to keep themselves safe”.
His other suggestions include the professions adopting a controversial definition of antisemitism, and to ban the slogans “from the river to the sea” and “globalise the intifada”.
Shadow treasurer says RBA decision shows its lack of confidence in Labor
The federal shadow treasurer, Tim Wilson, says today’s rate hike shows the Reserve Bank of Australia is not confident the federal government can reduce inflation:
Australian households are paying the price because of Jim Chalmers’ active inflation agenda.
While speaking to reporters earlier, Chalmers stressed that the RBA’s statement did not point to public spending as a factor in the rate hike.
Australians are ‘hostage’ to US decisions on Middle East conflict, Chalmers says
Asked if the US president, Donald Trump, is to blame for the rate rise, Chalmers says Australians are “hostage” to decisions made about the Middle East war:
I think that’s self-evident from an economic point of view.
The Australian economy is getting absolutely pummelled by this war in the Middle East, and Australians are paying the price for that. And we’re seeing that again today with this interest rate decision.
Upcoming budget will help fight inflation, treasurer says
Chalmers says next week’s federal budget will help fight inflation:
We intend to play a helpful role, not a harmful role, in the fight against inflation.
We take these inflationary pressures really seriously. We know that … Australians are under substantial pressure.
Jim Chalmers speaking in Canberra after RBA rate rise decision
The treasurer, Jim Chalmers, is speaking in Canberra after the Reserve Bank delivered a third straight interest rate hike.
Chalmers says the Middle East conflict has added to Australia’s inflationary pressures:
Australians are paying more, particularly for fuel … those price pressures are expected to be felt more broadly across our economy as well.
Australians paying ‘a hefty price’ for Middle East conflict, Chalmers says after RBA rate rise
Dan Jervis-Bardy
The federal treasurer, Jim Chalmers, said the RBA’s decision to raise the cash rate would “make it tougher” for Australians already paying a “hefty price” for the war in the Middle East.
In a statement, Chalmers said:
Today the independent Reserve Bank Monetary Policy Board increased the cash rate by 25 basis points. Australians are already paying a hefty price for the war in the Middle East and this decision will make it tougher. It will add to the pressure that families and businesses are under at a time of ongoing global instability.
The RBA’s Statement is clear that conflict in the Middle East is already adding to inflation. While this decision was widely expected and widely anticipated, that doesn’t make it any easier.
The treasurer is due to front a press conference in Canberra at 3pm.
Luca Ittimani
Just one RBA board member voted to leave interest rates on hold
One of the RBA’s board members voted to keep interest rates on hold today but the other eight overruled them to vote for a rate rise.
At its last meeting, five board members voted for an increase, defeating the other four who voted to wait and see how the war would impact inflation. The month before, the entire board voted for an increase.
Three of the board’s eight meetings since July, when votes first began to be published, have been split decisions.
The board is made up of the RBA governor, Michele Bullock, her deputy, Andrew Hauser and the Treasury secretary Jenny Wilkinson, plus six others: Marnie Baker, Renee Fry-McKibbin, Ian Harper, Carolyn Hewson, Iain Ross and Bruce Preston.
Bullock probably won’t tell us who the holdout was when she takes questions at 3:30pm. But she will tell us more about why the rest of the board overruled them to deliver a third consecutive hike.
Stay with us for updates.
Stephanie Convery
I’ll hand you over to my colleague Adeshola Ore now, who will take you through the rest of the afternoon’s news. Thanks for your company today so far.
Luca Ittimani
RBA says inflation will stay high after Iran war ends
The Reserve Bank board has warned inflation will probably stay high even if the Iran war ends soon, as businesses are starting to lift their prices.
In a statement on its decision to hike the cash rate to 4.35%, the RBA board said conflict in the Middle East was not only adding to inflation through fuel and commodity prices – businesses broadly were now expected to begin jacking up prices:
There are early signs that many firms experiencing cost pressures are looking to increase prices of their goods and services. …
Higher fuel prices are adding to inflation and there are indications that this is likely to have second-round effects on prices for goods and services more broadly.
The RBA had already raised interest rates twice this year, marginally restricting the flow of finance, but the board said credit was still “readily available to both households and businesses”:
In light of these considerations, the Board assessed that inflation is likely to remain above target for some time.
It said the risks were tilted towards even higher inflation, especially if the US war on Iran is not resolved “soon”. A longer or more severe conflict could force up energy prices, leaving inflation higher for longer and slowing growth.
