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Australians, already grappling with financial pressures, are bracing themselves for the impact of a potential interest rate cut expected today. Many say they will have to make further sacrifices, reducing spending on essentials like fuel, dining out, and personal care products.
For some, the financial strain is already overwhelming, and the anticipated rate cut may not significantly alter their situation.
Nine.com.au took to the streets of Sydney to gauge public sentiment, asking residents what expenses they would need to trim back.
The consensus among those interviewed was that a rate cut would necessitate a serious reevaluation of their budgets, with fuel costs being a significant concern.
“I’d cut back on hair and makeup products, and definitely use less petrol,” one woman shared.
“Maybe I’ll go home to my parents’ house, get my bike and start riding that around… and a free meal would be great thanks mum and dad.”
Others said discretionary spending would likely be the first thing to go.
“Going out and eating – bars, restaurants – that sort of thing,” another said.
Fuel costs were another common concern.
“Definitely fuel at the moment,” another said.
One prospective homebuyer said the current economic climate was already making things difficult.
“Eating out. Food. I’m trying to buy a property right now which is already hard enough – hard to find anything at a decent price – and then you’ve also got interest rates, so it just doesn’t help does it,” they said.
Others said they would simply have to be more cautious.
“I’m just going to have to be careful with what I spend. Obviously everything is going to be more expensive,” one resident said.
“Everyone drives a car, so fuel is expensive.”
Some said the cost-of-living pressures were already so severe that another rate rise would barely change their behaviour.
“I don’t really care… everything is just so bad it really won’t make much of a difference,” one person said.
Another said households would likely become more selective about when they splurge.
“You have to find your moments to spend money,” they said.
“You’ll amplify birthdays and special occasions, but week to week you’ll probably find yourself doing less with what you’ve got.”
Economists from Commonwealth Bank, Westpac and NAB are forecasting the Reserve Bank of Australia will increase the official cash rate when the board meets later today with another rise potentially following in May.
If that happens, the cash rate would climb back to 4.35 per cent – effectively wiping out the three rate cuts borrowers received last year.
Commonwealth Bank head of Australian economics Belinda Allen said the Reserve Bank would be closely watching how both global developments and domestic data evolve ahead of its next decision.
“Conflict in the Middle East has further threatened the inflation outlook,” she said, noting it could also pose risks to global and Australian economic growth.
Allen said recent domestic data could strengthen the case for a rate rise.
“GDP growth at 2.6 per cent came in above expectations, breaching the speed limit of around 2.1 per cent a year.
“The unemployment rate has printed for the second month in a row at 4.1 per cent, remaining well below the Reserve Bank’s and our estimate of the NAIRU, and January CPI data suggested continued inflation pressures.”
Her comments follow warnings from Reserve Bank deputy governor Andrew Hauser, who recently flagged that rising oil prices and ongoing global tensions could aggravate inflation.
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