Media commentator Alan Jones has accused the Reserve Bank of failing the Australian people by being too slow to raise interest rates.
The cash rate remained at a record-low of 0.1 per cent until May this year, even though inflation last year breached the central bank’s 2 to 3 per cent target.
But in May, June, July and August, borrowers have copped 1.75 percentage points of rate rises, taking the RBA cash rate to a six-year high of 1.85 per cent.
With borrowers copping the steepest rate increases since 1994, Jones blasted the Reserve Bank for being too slow to raise interest rates.
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Media commentator Alan Jones has accused the Reserve Bank of failing the Australian people by being too slow to raise interest rates
‘The Reserve Bank has failed and the punter knows it,’ he said on his online ADH TV show.
‘Petrol’s up, food prices are up, electricity, gas, the mortgage.
‘This mob have failed in their job – they didn’t move quickly enough.
‘It’s now belting us with the highest, successive interest rate increases in 30 years and the governor says they’ll get inflation back to two to three per cent – quote – overtime – unquote.
‘What the hell does overtime mean?’
Inflation in the year to June surged by 6.1 per cent, which was the fastest pace since 1990 when the one-off effect of the GST introduction in 2000 and 2001 was taken out.
The consumer price index in June last year grew at an annual pace of 3.8 per cent, a level above the RBA’s 2 to 3 per cent target.
Inflation in the year to June surged by 6.1 per cent, which was the fastest pace since 1990 when the one-off effect of the GST introduction in 2000 and 2001 was taken out (pictured is a shopper at Paddy’s Markets at Flemington in Sydney’s west)
Despite that, Reserve Bank of Australia governor Philip Lowe in October 2021 said the cash rate would not increase, from 0.1 per cent, until 2024 when ‘actual inflation is sustainably within the 2 to 3 per cent target range’.
‘The central scenario for the economy is that this condition will not be met before 2024,’ Dr Lowe said.
Warwick McKibbin, who served on the RBA board from 2001 to 2011, last week said the Reserve Bank had made a mistake in delaying rate increases last year, only for Russia’s Ukraine invasion to push average petroleum prices above $2 a liter.
‘I was already arguing for rates to be rising by the middle of last year,’ he told Daily Mail Australia.
‘To make a statement that he had to wait for wages to change, if there was a war in Ukraine, that would cause inflation as well – of course, that’s not on the horizon until it happens.
‘So the uncertainty just isn’t communicated well enough.’
The consumer price index in June last year grew at an annual pace of 3.8 per cent, a level above the RBA’s 2 to 3 per cent target. Despite that, Reserve Bank of Australia governor Philip Lowe (pictured) in October 2021 said the cash rate would not increase, from 0.1 per cent, until 2024 when ‘actual inflation is sustainably within the 2 to 3 per cent target range’
The Reserve Bank and Treasury are both expecting headline inflation later this year to hit a 32-year high of 7.75 per cent and remain outside the RBA’s 2 to 3 per cent target until 2024.
The ANZ back is expecting the cash rate to hit a 10-year high of 3.35 per cent by November with 0.5 percentage rate rises in September, October and Melbourne Cup Day.
All the big four banks are expecting the RBA to raise raises by another 50 basis points in September, which mark the fourth consecutive increase in that size.
The May rate rise was the first since November 2010, ending the era of the record-low 0.1 per cent cash rate that had been in place since late 2020.
The June rate rise of half a percentage point was the biggest since February 2000.
Warwick McKibbin, who served on the RBA board from 2001 to 2011, last week said the Reserve Bank had made a mistake in delaying rate increases last year
Surging inflation and a series of interest rate rises are making Australians feel gloomy, with the Westpac-Melbourne Institute consumer sentiment index in August falling by another three per cent to a two-year low of 81.2 points.
This was well below the 100 mark where optimists outnumber pessimists, with the monthly reading declining for nine straight months.
Sentiment is 22 per cent weaker compared with a year ago, despite unemployment in June falling to a 48-year low of 3.5 per cent.
Confidence in regional or rural areas fell by five per cent in August to a record low of 72.8 points – the lowest since January 1996 shortly before Labor prime minister Paul Keating lost an upcoming election in a landslide.
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