- Reserve Bank chief reveals more Aussies relying on charity
The nation’s most powerful banker has revealed an increasing number of Aussies are turning to charity for the first time in their lives to survive.
Reserve Bank Governor Michele Bullock told a mental health charity lunch aggressive rate hikes were now forcing more people to ask for the kind of help they hadn’t previously sought.
‘Information received through the RBA’s liaison program indicates that more people than usual are seeking support from community organisations, and often for the first time,’ she told the Australian Business Economists lunch in Sydney on Thursday.
She noted low-income households and renters were the most vulnerable.
‘Lower income households tend to allocate more of their spending towards essentials, including food, utility bills and rent,’ she said.
‘The experience of individual households varies widely, but younger households and lower income households have been particularly affected by cost-of-living pressures overall.’
Ms Bullock, however, has ruled out any rate cuts before Christmas in her speech titled, ‘The High Cost of Inflation’ for the Anika Foundation charity.
‘Circumstances may change, of course, and if economic conditions don’t evolve as expected, the board will respond accordingly,’ she said.
The nation’s most powerful banker has revealed an increasing number of Aussies are turning to charity to survive (pictured is a Food Bank charity helper)
‘But if the economy evolves broadly as anticipated, the board does not expect that it will be in a position to cut rates in the near term.’
The RBA cash rate was last month left on hold at a 12-year high of 4.35 per cent with no relief likely soon from the 13 rate hikes in 2022 and 2023 .
The most aggressive hikes since the late 1980s are already hitting the economy with the 1 per cent growth rate in the year to June the weakest since the 1991 recession, outside of a pandemic.
But Ms Bullock said failing to tackling high inflation now would simply lead to even higher unemployment later.
‘High and variable inflation can also cause shifts in people’s wealth and spending power,’ she said.
‘Agreeing to a new contract, or making saving plans, is harder if you don’t know how expensive things will be in the future.
‘Moreover, high inflation eventually requires disinflation, which can have long-lasting costs for households through higher unemployment.’
Inflation hit 3.8 per cent in June with the Reserve Bank not expecting the annual consumer price index to fall within its 2 to 3 per cent target until the end of 2025.
Unemployment climbed to a two-year high of 4.2 per cent in July with the RBA forecasting it will climb to 4.4 per cent by the middle of next year.
Reserve Bank Governor Michele Bullock has told a mental health charity lunch aggressive rate hikes were now forcing more people to ask for the kind of help they hadn’t previously sought
