Prepare for ‘bumpy’ path to lower inflation: Michele Bullock
Australians “should all be prepared” for a “bumpy” path to lower inflation, the RBA governor, Michele Bullock, says:
I’ve said before that we have made progress here, and we’re not going to jeopardise that. The rise in interest rates that has been required to bring down inflation has been painful for many people. Inflation is, though, as I’ve said before, is bad for everyone and we have to see the job through.
We believe we have rates at the right level to return inflation to the target range next year. But as we said in the past, getting inflation back to target will take time, and I think the path will likely continue to be bumpy and we should all be prepared for that.
Key events
‘We are not ruling anything in or out’: RBA
Guardian Australia’s economics correspondent Peter Hannam is asking the RBA governor, Michele Bullock, whether the bank is maintaining a neutral bias.
Bullock says “we are not ruling anything in or out”:
In the past, when we’ve had statements, we’ve said we may increase interest rates. We haven’t put that explicitly back in.
But I think if you read the statement, you will see that the board is signalling that they are very alert to the fact that it might be a little bit higher, and they’re remaining vigilant on that.
We’re not ruling anything in or out because things are uncertain. But … the recent data [has] indicated to us, we need to be a little bit alert and vigilant on this.
Inflation at ‘front of mind’ for government: Bullock
“What is being said” by government points to inflation being front of mind for the upcoming budget, RBA governor Michele Bullock says:
The federal treasurer Jim Chalmers, he says publicly and he says to me in private that he does have inflation in his mind while he is thinking about the budget …
Budgets are very difficult, they are big balancing acts for governments. They’ve got lots of things on their plate. And I think they are all conscious that they want to help us beat inflation.
The signs, at least by what’s being said, are to me that inflation is at front of mind.
RBA ‘very conscious’ of people ‘doing it tough’
The RBA governor, Michele Bullock, says the bank is conscious of households “who are really struggling to make ends meet”:
These people don’t have a lot of extra savings. They might be working a second job, cutting back on discretionary items or making difficult decisions, such as putting off medical appointments. These people are doing it very tough, and the board and I are very conscious of that.
One of the outcomes of this is that consumption, household consumption is very weak. And you can see that in the retail figures from last week. Growth is very subdued, even though population growth is strong. We also know the housing market is very tight, and anyone who is trying to get a rental property can tell you just how challenging that is at the moment.
As I’ve said before, bringing inflation down, we want to keep employment growing. This is the difficult path that we are trying to navigate right now. We believe that rates are at the right level to achieve this, but there are risks and at this stage the board is not ruling anything in or out. We must get inflation back to the target band, low and stable … That’s the best thing we can do for all Australians.
Prepare for ‘bumpy’ path to lower inflation: Michele Bullock
Australians “should all be prepared” for a “bumpy” path to lower inflation, the RBA governor, Michele Bullock, says:
I’ve said before that we have made progress here, and we’re not going to jeopardise that. The rise in interest rates that has been required to bring down inflation has been painful for many people. Inflation is, though, as I’ve said before, is bad for everyone and we have to see the job through.
We believe we have rates at the right level to return inflation to the target range next year. But as we said in the past, getting inflation back to target will take time, and I think the path will likely continue to be bumpy and we should all be prepared for that.
The Reserve Bank of Australia governor, Michele Bullock, says “we must continue to be vigilant about the continued risk of high inflation”, speaking live to the media.
Keep an eye on the live blog for rolling updates from the bank’s press conference to come.
Catie McLeod
Minns leads tributes to Bondi junction stabbing victims
The New South Wales premier, Chris Minns, has paid tribute to the victims of last month’s Bondi junction stabbing attack.
Leading a condolence motion in state parliament a short time ago, Minns condemned killer Joel Cauchi’s stabbing rampage as “an unforgivable act of violence”.
Addressing the families and friends of the victims, Minns said he recognised their grief.
Today as a parliament, we send you our solidarity, and whatever small comfort we can offer. We also send you our love.
All six of the victims … had something in common. They were hopeful, optimistic people, raising kids, planning their wedding day, savouring young love, or starting new careers.
What happened in Bondi was unforgivable. Nothing can excuse it, or explain it. We can’t contextualise it. It was an attack at the end of the day on innocent people, on life as it was being lived.
Peter Hannam
RBA hawks to pull in their talons for a bit
The RBA said it remains “vigilant to upside risks” from inflation but most economists won’t see that as adding a “tightening bias” to its monetary policy stance.
Investors had been tipping a 40% chance of a rate rise by September but that bet has now been pared to 16% (so my Reuters colleagues in the RBA lockup tell us).
Some economists will be wondering if they put too much weight on the March CPI numbers. The RBA seems to have taken them in its stride.
What’s interesting from the accompanying RBA statement on monetary policy is the important role government demand is playing in keeping the economy from stalling. That might give the treasurer, Jim Chalmers, more reason to think he doesn’t need to deliver any “scorched-earth austerity” as he said on Monday.
Meanwhile, you can follow on with our article here:
Caitlin Cassidy
University of Sydney’s union could become first to endorse academic boycott of Israel
The University of Sydney’s union could become the first branch in Australia to endorse the institutional academic boycott of Israel, with a vote to go ahead amongst members on Thursday.
The motion, to be raised at a National Tertiary Education Union (NTEU) branch meeting, will call on the university to cut ties with Israeli academic institutions and to stop all weapons-related research.
It comes as a pro-Gaza encampment at the University of Sydney, led by members of Students for Palestine, approaches its second week.
Sydney University’s branch president of the NTEU and historical supporter of Palestine, Nick Riemer, said as union members in a university, there weren’t often situations where academics could meaningfully intervene in global affairs.
This is an exception: Palestinian unions and university workers have appealed to us, their international colleagues in higher education, to take a stand. To that end, we will be debating this motion at our meeting on May 9.
Rafqa Touma
Thanks to Emily Wind for rolling today’s live blog!
I’ll be taking you through the afternoon’s breaking news. If there is anything you don’t want the blog to miss, shoot it my way to @At_Raf_ on X.
Emily Wind
Many thanks for joining me on the blog today, Rafqa Touma will be here to guide you through the rest of today’s rolling coverage. Take care.
High court to deliver ASF17 ruling on Friday
Paul Karp
The high court will deliver its judgment in the ASF17 case at 10am on Friday.
The case concerns whether the government must release people from immigration detention who can’t be deported, even if their non-cooperation is partly to blame.
This could trigger the release of more than 170 people in detention.
#breaking the High Court will deliver judgment in the ASF17 case at 10am on Friday.
Case concerns whether govt must release people from immigration detention who can’t be deported even if their non-cooperation is partly to blame.
Could trigger release of 170+ in detention.
— Paul Karp (@Paul_Karp) May 7, 2024
Victorian treasurer’s budget speech interrupted by protesters
Tim Pallas, the Victorian treasurer, has been interrupted by protesters during his budget speech in parliament.
In footage from parliament you can hear protesters shouting from the public gallery. The house was paused and parliamentarians left the chamber while the gallery was cleared.
It is unclear what the protesters were shouting. Sky News reported that a group of about 20 protestors have been banned from the parliament for at least seven days.
Peter Hannam
RBA holds back on hawkish comments – for now
Many – including your correspondent – anticipated tougher language in the RBA’s statement. But as far as we can see, the key words are basically unchanged. It said:
Recent information indicates that inflation continues to moderate, but is declining more slowly than expected.
Still, “[t]o date, medium-term inflation expectations have been consistent with the inflation target and it is important that this remains the case”, it said.
The absence of more hawkish wording sent the Australian dollar down to 66.1 US cents, from about 66.3 US cents prior to the statement. Stocks added to their gains, rising to 1% for the day compared with 0.8% just before 2.30pm AEST.
We’ll get to hear more from the RBA governor, Michele Bullock, shortly but their stance is not as tough as many anticipated. In short, yes, inflation is higher than expected but growth in the economy is weaker than forecast – so they balance out.
Coalition recommends extensive amendments to deportation bill
Paul Karp
The Senate’s legal and constitutional affairs committee has reported back on Labor’s controversial deportation bill.
The bill contains mandatory minimum sentences of one year in prison for a non-citizen refusing to cooperate with their deportation, as well as ministerial powers to blacklist whole countries from new visa applications if they refuse to accept involuntary removals.
It’s fair to say the committee is completely split. Labor senators said that the minister should “consider community impacts” when blacklisting countries, but otherwise pass the bill. The Greens in a dissenting report said the bill should be rejected in full.
As expected, the Coalition has recommended a slate of amendments. These include:
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Specifying those who have cases on foot can’t be given a direction to cooperate with deportation
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Prior to giving a removal pathway direction in relation to any child, the minister must conduct an assessment of whether the direction is in the best interests
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The minister should be required to tell parliament every time they have issued a removal pathway direction
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The power to declare a country as a removal concern country be redrafted to require the minister to consider a set of factors which must be considered prior to making a designation
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Any declaration of a country as a removal concern country should be subject to sunsetting after three years
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Expanding the definition of family for the exemptions to the prohibition on applying for visas
Senator David Pocock also issued a dissenting report, calling for a new process to review people whose protection claims were assessed by the fast-track process.
Reserve Bank leaves interest rates unchanged
Peter Hannam
The Reserve Bank has – to the relief of many borrowers – just announced it will leave its key interest rate unchanged for a fourth board meeting in a row at 4.35%
The result was widely expected, with only Capital Economics predicting the RBA would hike rates today.
Attention will now focus on whether the language of the RBA and its governor, Michele Bullock, has changed. Many analysts expect a “tightening bias”, implying the next move by the central bank is more likely to be a rate rise rather than a cut.
Stay tuned for more shortly.
