Interest rate cuts may not necessarily offer immediate relief for low-income renters, a parliamentary committee has been told.
Reserve Bank of Australia (RBA) Governor Michele Bullock said the worst affected group during the interest rate hike in the past few years were lower-income people who were renting.
“They’ve seen a massive increase in rents, and they’ve also experienced massive inflation,” she said during a recent inquiry hearing.
However, the governor noted that those people are not necessarily going to benefit from a decrease in interest rates.
“They are going to benefit as inflation starts to come down, and it is coming down,” she said.
“As the housing stock is still not in balance, we’ve still got an issue with supply and demand for housing.
“But what we have observed is that rents are starting to come down, so that’s really positive for them.”
Bullock’s remarks came after the RBA decided to reduce the interest rate from 4.35 to 4.10 percent in February 2025, the first time in four years.
While the government is optimistic that the worst of inflation has passed, some economists remain cautious about the economy’s outlook.
At the same time, Bullock noted that the average household size had recently risen after a period of troughing.
“What I think we’re seeing is that as rents have become very expensive because of the slight supply-demand imbalance, you’ve seen people make choices: we will rent out because we need an extra person in the house to help pay the rent,” she said.
RBA’s Cautious Approach to Inflation
The inquiry also touched on the possibility of further rate cuts. In response, Bullock said there had been different views about the RBA’s decision to slash the interest rate.“Some think that we’ve made a mistake lowering the interest rate, and that we should be further increasing interest rates,” she said.
“There are others who hold very firm views that we are, in fact, still far too tight, and that we need to lower interest rates quickly and more.”
The governor noted that the central bank had taken a cautious approach toward the downward trend in inflation in recent months.
Specifically, the RBA did not lower the interest rate in December 2024, when the annual inflation rate dropped from 2.8 percent in the September quarter to 2.4 percent in the December quarter.
“We didn’t move in December, but we did highlight that we'd taken some comfort from some of the indicators,” she said.
“And this time, we’ve got a little bit more confidence so we can remove what we put on.
“I think that we are in the position now where we might have some more decreases in interest rates, but we’ve got to be cautious.”

RBA Says People Need to Be Patient
Bullock said interest rates could be further reduced if the RBA judged that the inflation situation was sustainable enough.“If the board is comfortable that inflation is heading back to target sustainably–not just popping in and then popping back out again, it’s got to be sustainable–then that will give them more evidence that they can perhaps nudge the interest rate down further,” she said.
As such, the governor urged people to remain patient while the RBA navigated the situation.
“We’re not pre-committed. We’re going to be data-driven on this, and I think people just have to be patient,” she said.
“I know interest rates hurt people who have mortgages, but inflation hurts absolutely everyone, particularly those on lower incomes and more vulnerable.”