Rates on hold (for now); insurance crisis for homeowners; peace deal 1.5 pages long
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What is the main topic discussed in this episode?
Welcome to Fear and Greed, business news you can use today.
What recent decision did the Reserve Bank make regarding interest rates?
The Reserve Bank leaves interest rates on hold but warns it will hike again if inflation doesn't fall back towards its target level. One quarter of Australians are at risk of not being able to afford home insurance by 2030 and the peace deal between the US and Iran runs for just one and a half pages. Plus, the ACCC takes on Grilled over its Tree Day promotion and the Bureau of Meteorology officially announces an El Nino for Australia. It is Wednesday, the 17th of June, 2026. I'm Michael Thompson and good morning, Sean Aylmer. Good morning, Michael. A couple of fun stories today, believe it or not. Yeah. Believe it, I haven't actually found them yet, but I'm sure they are coming up. The main story this morning, let's get through the meaty story here, Sean.
The Reserve Bank of Australia left the cash rate at 4.35% yesterday. As the economy starts to show these signs of slowing after three increases so far this year, the decision was unanimous among the nine voting board members. The central bank is still worried, clearly, about price pressures. They're saying that headline and underlying inflation are still too high. And while these oil prices have eased, they do remain above where they were prior to the Middle East conflict.
What are the implications of homeowners facing insurance affordability issues?
There are also some signs that some companies experiencing cost pressures have started putting the price of their goods up and others will follow. Governor Michelle Bullock, you put it all together, Governor Michelle Bullock would not rule out another rate hike yesterday.
Yes, however, the central bank did say that growth in consumer spending is slowing and momentum in the housing market has shifted. The unemployment rate was higher than expected in April, though Bullock then talked about it being still a bit tight, whatever that means. The Reserve Bank had a bet each way on the Middle East crisis, saying there are a bunch of scenarios that could play out. It doesn't want a recession. It doesn't want to experience and doesn't think it will experience one any time soon. That's according to the governor. Bringing inflation down doesn't mean the Reserve Bank will ignore the jobs market either, especially since the Fair Work Commission's 4.75% increase to the minimum wage from July 1 was higher than the central bank expected.
So it is certainly keeping an eye on the jobs market.
How is the ACCC addressing misleading claims by Grill'd?
But the bottom line, inflation is still too high. The bank, though, can leave the cash rate unchanged while it assesses the response to previous interest rate rises and the impact of the oil supply disruption. In fact, a hike wasn't even considered at this week's board meeting, and they're just going to sit back and watch.
As you would expect, Treasurer Jim Chalmers welcomed the RBA's unanimous decision to keep rates on hold. But bond markets, Sean, are still pricing in a better than 50% chance of another rate hike in the months ahead, and that is largely because of these inflationary pressures from the war in the Middle East. You look around, you see what everyone is saying. The jury is out, right, on whether there will be another rate rise this year. You've got respected market economists taking positions on both sides of the argument. While the RBA remains hawkish, as in it has a bias to lifting interest rates, it seems less hawkish. It's a slightly smaller hawk now. It's gone from being a large eagle to now being a small peregrine falcon.
A baby hawk.
What does the Bureau of Meteorology's El Nino announcement mean for Australia?
That's exactly right. Very impressive knowledge of birds there. Yes, that's right. I mean, the Reserve Bank's among a small but growing group of central banks that are tightening monetary policy to stamp out inflation. Of course, here, the Reserve Bank targets underlying inflation. It wants it to run at 2% to 3%. Currently, it's at 3.4%, still above what the Reserve Bank wants it to be at. Headline inflation, which includes more volatile items like petrol prices, is running at 4.2%. I think the person that put it best yesterday is global ex-ETF investment strategies person, Mark Jochum.
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Chapters
5 chapters
1
What is the main topic discussed in this episode?
0:06–0:09
2
What recent decision did the Reserve Bank make regarding interest rates?
0:09–1:30
3
What are the implications of homeowners facing insurance affordability issues?
1:30–2:30
4
How is the ACCC addressing misleading claims by Grill'd?
2:30–3:35
5
What does the Bureau of Meteorology's El Nino announcement mean for Australia?
3:35–18:23
Speakers
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