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Stephen Capello and 1494 2AY, February 2023 RBA recap.


Our CEO, Stephen Capello, spoke with Matt of 1494 2AY on the Reserve Bank of Australia’s 9th straight interest rate rise.

Stephen commented that the rate rise of 25 basis points, bringing the RBA’s cash rate to 3.35%, is one that is designed to put additional pressure on households.

The key driving force for the continuation of rate rises is due to inflation which remains high at 7.8%. Whilst this rate is slightly above expectations, it is still more than double the RBA target of 2-3%. They [RBA] have indicated they see positive signals on the horizon, but still areas of concern.

In response to Matt’s question about the impact of this rate rise, Stephen commented, the aim of the RBA and this rate rise is to force households with mortgages to pay more interest to their banks. It reduces households’ disposable income, impacts how much money they have to spend and reduces demand and economic activity over time.

Matt asked, is there a concern they could do more harm than good in the long run? To which Stephen replied, there will become a time when the system can’t take anymore rises and economic activity in this sense will be strangled and demand will slow to a crawl. Businesses will need to reduce prices to survive, they’ll also need to reduce costs. Which may lead to a rise in unemployment, for example, or where households will need to allocate more of their take-home pay to lending.

Stephen put this rate rise into perspective, noting that it will cost an additional $81 per month on a half a million-dollar mortgage.

Stephen commented that monthly research has shown that house prices have begun dropping across the nation. January marked a new record for how much and how fast dwelling values have fallen in Australia. Prices are down nationally by 9% since peaking in April and the month of January was the largest decline since 1980.

Matt concluded the interview by congratulating Hume Bank on our recent announcement that we are opening a new branch in Holbrook in March, which bucks the national trend of banks closing their branches. We are very excited to be working with the community to provide this service for them.

Click play below to listen in for more