Editorial: Rate cut welcome relief for homeowners – and Albo

The Reserve Bank’s decision to cut the cash rate from 4.35 per cent to 4.1 per cent won’t make a big dent in sky-high mortgage bills, but it’s still great news, writes the editor.

Reserve Bank governor Michele Bullock on Tuesday. Picture: David Gray/AFP

The Reserve Bank’s decision to cut the cash rate from 4.35 per cent to 4.1 per cent won’t make a big dent in sky-high mortgage bills, but it’s still great news.

Every penny counts, of course, and $100 a month off an average home loan isn’t to be sneezed at.

But the real significance of this first cut in the cash rate since the depths of Covid-19 in 2020 means the RBA now thinks the battle against high inflation has been won – at least temporarily.

That should be a huge psychological boost for the economy. And if some economists are right and inflation does continue to ease, there could be several more interest rate cuts during the rest of the year, which would quickly translate into significant relief for mortgage holders hit by 13 successive increases since 2022.

But – and there’s always a but when the ever cautious RBA is concerned – the bank’s governor Michelle Bullock has warned financial markets about too much optimism. She said interest rate policy would remain restrictive and that the board would lift rates if it noted any reversal in inflation trends.

Still, that’s the role of the RBA governor – to keep a lid on inflation by trying to calm down too much economic exuberance, first with words and then, if that fails, with the harsh medicine of jacking up interest rates again.

For now, it’s worth celebrating the good news that rates are falling for the first time in years.

The RBA’s 13 successive rate hikes between May 2022 and November 2023 pushed up the cash rate from 0.1 per cent to 4.35 per cent in a bid to rein in surging inflation caused by a combination of Covid-era supply chain disruptions, post-Covid-19 government stimulus packages and the Ukraine-war-related global energy shock.

That cash rate, in turn, has meant soaring mortgage rates and growing pain for anyone with a home loan, to the extent that according to data from mortgage specialist Digital Finance Analytics, nearly 44 per cent of surveyed Queensland households are suffering mortgage stress. The survey also found 35 suburbs where 100 per cent of households were in mortgage stress.

The Reserve Bank’s decision to cut interest rates will be a shot in the arm for Australian households as the major banks passed on the full cut within minutes of the RBA’s announcement.

The rate cut is also good news for the Albanese government – Imagine Peter Dutton’s blustering accusations of economic mismanagement by Labor if the RBA had kept the cash rate steady.

Treasurer Jim Chalmers quickly took some credit for the interest rate cut, declaring it was the “soft landing that we’ve been planning for and preparing for”. Hoping and praying for might be better descriptions, but still, it does set the stage for the government to call an election sooner rather than later.

Mr Albanese insists the RBA’s rate cut “won’t have an impact” on when he calls the election, which is due by May 17. Well yes, if you say so Prime Minister. But in any event a bigger question for Mr Albanese is whether to go to the polls before or after the RBA’s next meeting on April 1, which is when we’ll discover whether Governor Bullock was bluffing about hiking up rates again if the bank’s not happy with inflation trends.

LONG TIME TO STARTING LINE

It’s taken us almost four years to get this far, but Queenslanders can finally see the start line in the race towards the 2032 Olympic and Paralympic Games.

While most would have thought we’d be well into the race by this stage, political mismanagement, indecision and second-guessing means that when the starter’s gun fires on March 25 with the release of the infrastructure review report, we’ll have seven years to prepare for the greatest show on earth.

The report will be handed to the government on March 8 before it consults with other levels of government, the International Olympic Committee and 2032 organising committee President Andrew Liveris to ensure they are in “lock step” towards the Games.

It means Brisbane will have about the same time Sydney had to prepare for their “best ever” Games, despite the massive headstart we were handed by the IOC way back in July 2021.

We’ve been here before of course, when then-premier Steven Miles announced an independent infrastructure review in December 2023, only to reject (before the report was even released) its key recommendation of a stadium at Victoria Park in favour of an upgrade to the QSAC facility at Nathan.

A whole year has been lost because of that decision. We can’t afford to waste any more time.

When the report is released in just 34 days from now, Premier David Crisafulli needs to back it in.

Responsibility for election comment is taken by Chris Jones, corner of Mayne Rd & Campbell St, Bowen Hills, Qld 4006. Printed and published by NEWSQUEENSLAND (ACN 009 661 778). Contact details here

Originally published as Editorial: Rate cut welcome relief for homeowners – and Albo