Australia’s trump card to avoid a recession

“We still feel that there is a path for us here where we can get inflation down, not go into recession, preserve most of the gains in employment that we’ve had,” Ms Bullock said at the Australian Finance Industry Association (AFIA) annual conference in Sydney on Tuesday morning.

Earlier this month, the RBA made the shock decision to ease interest rate hikes by applying a moderate 25 basis point rise rather than the 50 basis points predicted by markets.

It was the first time the bank had offered some relief to consumers after four consecutive 0.5 percentage point hikes in the last 12 months had wreaked havoc on mortgage repayments.

“Inflation is too high at the moment,” Ms Bullock said.

She explained that the decision to increase interest rates by just 25 basis points was one that took into consideration the substantial increases already made since May.

Ms Bullock also revealed the RBA was uniquely positioned compared with its overseas peers because the board met 11 times a year.

“It means that we can increase rates at every meeting and we can achieve a similar rise but in smaller increments,” she said.

The Aussie dollar was near US62.85c when the market closed on Monday.

It comes days after the US Federal Reserve hiked interest rates to help the suffering US dollar.

The latest unemployment figures are due to be released on Thursday, while the quarterly consumer price index will be released next week.

More to come