Kochie Sounds Alarm: Another Rate Hike Would Punish Households

With the Reserve Bank of Australia (RBA) set to make its next interest rate decision on August 11, top finance commentator David Koch is urging Governor Michele Bullock not to hike rates again. According to Koch, another rate increase would unfairly punish households for inflation being driven by factors largely outside their control.

Rising petrol prices, grocery costs, and higher mortgage repayments are already pushing families to the limit, with consumers having 'gone into the bunker' and cutting back wherever possible. The Compare the Market economic director argued that it's not consumers who are driving inflation, but rather factors such as the conflict in the Middle East.

Koch also suggested that fiscal policy rather than higher interest rates should be doing more to curb inflation. He proposed that Governor Bullock have a word with Treasurer to cut government spending and reduce demand. The RBA has already lifted the cash rate three times this year, increasing it by 0.25 percentage points in February, March, and May before holding steady in June.

The cash rate currently sits at 4.35 per cent, with financial markets pricing in a roughly 40 per cent chance of another interest rate hike this month. However, most economists expect the RBA to leave the cash rate unchanged. Compare the Market estimates that another 0.25 percentage point increase would add about $120 a month to repayments on an average-sized $735,000 mortgage.