A leading finance expert has unleashed a scathing attack on the Reserve Bank of Australia’s (RBA) decision to hike interest rates for an 11th time, labelling the move a “slap in the face” for mortgage holders.
On Tuesday, the cash rate was increased by another 25 basis points, bringing it to a staggering 3.85 per cent – its highest level since April 2012.
It comes after the choice was made to pause interest rate hikes last month, following a whopping 10 consecutive increases between May 2022 and March 2023.
Money guru Mark Bouris was quick to smash the hike, arguing it was “completely unnecessary” and placed the economy on the brink of collapse.
“Wow, another 25 basis points – are they serious? … Do they want to break the backbone of Australian mortgage holders?” he questioned in a passionate clip shared to his Instagram.
The Yellow Brick Road (YBR) executive chairman then went on to criticise the RBA, which is led by Governor Philip Lowe, for instilling a false sense of “security and safety” following last month’s pause.
“They’re saying inflation is still too high at 7 per cent … they’re saying that unemployment is still too low at 3.5 per cent … for me they should have just paused and waited to see what happens with the interest rate increases they’ve already jammed us with,” he explained.
“This is going to cause something to break, from my point of view, and I think they’ve just gone way too far.”
Mark Bouris says the latest hike was “unnecessary”. Picture: Supplied
Mr Bouris added that he believed the RBA were more worried about the data side as opposed to how the increases were impacting already struggling families “crushing” under financial stress.
His comments come as new data released by the Finance Brokers Association of Australia (FBAA) found Australians were cancelling holidays, selling assets, taking on additional work and cutting back on spending in record numbers so they can stay financially afloat.
One in two mortgage holders reported they were feeling more stressed while more than 25 per cent reported the pressure had caused tension with their partner or loved ones.
Additionally, almost 50 per cent of mortgage holders felt insecure about their future, with the report showing a significant spike in people seeking mental health support off the back of rising interest rates and rental increases.
“This interest rate increase is just a slap in the face from my point of view and I think it was one of those ones that were completely unnecessary,” Mr Bouris concluded.
The cash rate is now sitting at 3.85 per cent. Picture: NCA NewsWire / Aaron Francis
Calls to overturn decision
The Australian businessman’s comments come amid calls for Treasurer Jim Chalmers to overturn the RBA’s shock decision to hike rates, with fears the latest result could lead to a recession.
Greens Senator Nick McKim is among several leaders urging the government to step in to “overrule (the) terrible decision”.
“The RBA’s decision to raise interest rates again beggars belief and will smash renters and mortgage holders even harder than they were being smashed already,” Senator McKim said.
“If Dr Chalmers refuses to act it will be a tacit endorsement of the RBA’s decision and will mean that he supports the rate rises.”
Leaders are pleading with the government to overturn the RBA’s latest decision. Picture: NCA NewsWire/Joel Carrett
FBAA managing director Peter White also pleaded with the RBA to “ease off and allow Australians to recover” prior to the eleventh hike, arguing many Australians are on the “brink and are sleepwalking into disaster”.
“Governments and lenders knew this was coming because the global indicators were there, but somewhere along the line there was a failure to prepare Australians who had become complacent after more than a decade without seeing any rate rises,” he said.
“We are sadly now seeing the results … It will take a combined approach by the government, lenders and the community at large to help people through this.”
But despite the calls, Dr Chalmers remained tight-lipped about whether he supported the RBA’s decision, conceding the latest rise was a “brutal reminder” of the inflation challenge Australia is currently facing.
“I think that the rate rise is really a pretty stark, pretty brutal reminder of the difficult economic conditions,” he said.
“And I think people are broadly aware that we’ve got an inflation challenge in our economy, people feel it every day.”
RBA Governor Philip Lowe announced the latest rise on Tuesday. Picture: NCA NewsWire / Nikki Short
Dr Chalmers also dodged the question on whether he feared the country was being led into a recession off the back of increasing rates.
“As you know, my job is different. It‘s to hand down a budget, which is carefully calibrated to these economic conditions that we confront right now,’’ he said.
The Treasurer said the government along with the RBA, expects the country’s economy to substantially slow down later this year with inflation to “moderate off the peak” by Christmas.
“It’s still higher than we’d like for longer than we’d like and the forecast will reflect that as well,” Dr Chalmers said, noting the fast-approaching May 9 federal budget.
“Our job is to provide responsible cost of living relief, to do what we can without adding substantially to this inflation challenge that we have in our economy.
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“And the best way to do that is to prioritise the most vulnerable and the best way to do that is through ways like the energy bill assistance … which is all about getting electricity prices, not rising as much as what they were anticipated to do last budget.”
– With Samantha Maiden
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