ABC News Daily Why the RBA shocked borrowers and held rates
Jul 8, 2025
Michael Janda, ABC's business editor, discusses the Reserve Bank of Australia's unexpected decision to hold interest rates steady, much to the surprise of analysts and the Treasurer. He examines the split views within the board regarding inflation data's reliability. Janda also explores the implications for households, especially those with mortgages, amidst ongoing economic uncertainties. The talk touches on how global trade issues and key economic indicators might shape future decisions on interest rates.
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RBA Board Split on Rate Decision
- The RBA board was split 6-3 on holding rates despite market expectations of a cut.
- They doubted the reliability of the May monthly inflation indicator and preferred to wait for quarterly data.
RBA Focuses on Inflation Control
- The RBA prioritizes controlling inflation over easing mortgages for homeowners.
- Inflation impacts all households, while high rates mainly hurt mortgage holders.
RBA Buys Time with Previous Cuts
- Despite no rate cut in July, previous cuts may have eased mortgage stress significantly.
- The RBA believes mortgage default rates have peaked, giving them room to wait for clearer inflation data.