Australians are already struggling under the weight of rising costs, and today’s anticipated rate cut could push them to tighten their belts even further. Many are contemplating scaling back on essentials like fuel, dining out, and personal care items such as hair and makeup products.
For some, the financial strain has already reached a point where another rate cut might not significantly alter their circumstances. The situation is so dire that the impact of further economic adjustments feels negligible.
In an effort to capture the public sentiment, Nine.com.au ventured into the streets of Sydney to gauge how residents plan to cope. One common concern was the escalating price of fuel, with many acknowledging that owning a car has become increasingly costly.
Some individuals expressed a sense of resignation, indicating that the cost-of-living crisis has been so overwhelming that additional financial burdens seem almost inconsequential. “I don’t really care… everything is just so bad it really won’t make much of a difference,” one person candidly remarked.
Some said the cost-of-living pressures were already so severe that another rate rise would barely change their behaviour.
“I don’t really care… everything is just so bad it really won’t make much of a difference,” one person said.
Another said households would likely become more selective about when they splurge.
“You have to find your moments to spend money,” they said.
“You’ll amplify birthdays and special occasions, but week to week you’ll probably find yourself doing less with what you’ve got.”
Economists from Commonwealth Bank, Westpac and NAB are forecasting the Reserve Bank of Australia will increase the official cash rate when the board meets later today with another rise potentially following in May.
If that happens, the cash rate would climb back to 4.35 per cent – effectively wiping out the three rate cuts borrowers received last year.
Commonwealth Bank head of Australian economics Belinda Allen said the Reserve Bank would be closely watching how both global developments and domestic data evolve ahead of its next decision.
“Conflict in the Middle East has further threatened the inflation outlook,” she said, noting it could also pose risks to global and Australian economic growth.
Allen said recent domestic data could strengthen the case for a rate rise.
“GDP growth at 2.6 per cent came in above expectations, breaching the speed limit of around 2.1 per cent a year.
“The unemployment rate has printed for the second month in a row at 4.1 per cent, remaining well below the Reserve Bank’s and our estimate of the NAIRU, and January CPI data suggested continued inflation pressures.”
Her comments follow warnings from Reserve Bank deputy governor Andrew Hauser, who recently flagged that rising oil prices and ongoing global tensions could aggravate inflation.
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