ACOSS CEO Cassandra Goldie said the RBA should have paused on interest rate rises to take stock after last year’s rapid increases.
“This decision will make it harder for people to keep their jobs or to get the paid working hours they need,” Dr Goldie said.
“The full effects of rate rises wont be felt until the end of the year, which is all the more reason to pause and take stock.
“People should not be sacrificed to higher unemployment, and life on below-poverty income support, to keep inflation in check.
“High inflation is a challenge that should be tackled – and the government should do more beyond the welcome curbs on gas prices.
“We need to tackle the causes of inflation, including better regulation of exorbitant rent and energy prices, and strengthening the ACCC.
“We cannot afford to rely on the blunt instrument of higher interest rates to control inflation.”
Key facts
Interest rate rises impact on the economy 12-18 months after they are announced. After the sharpest interest rate hikes in decades this year, there are signs that inflation is stabilising or declining.
- In the December quarter the CPI rose by 1.8%. ‘Core’ inflation or ‘trimmed mean’ CPI rose by 1.6%, compared with 1.8% for both measures in Sept 2022.
- In that quarter, the CPI was propped up largely by spending on holidays and travel, reflecting pent up demand from the pandemic. That is likely to subside.
- Retail sales slumped by 3.9% in December.
In December 2022 we saw the early signs of a slowdown in employment as employment and hours worked decreased while underemployment increased:
- Employment decreased by 15,000 workers (seasonally adjusted)
- The employment to population ratio decreased to 64.3%
- While unemployment was stable at 3.5%, underemployment rose from 5.8% to 6.1%
- Monthly hours worked decreased by 9 million to 1,888 million
