Finance guru David Koch urges RBA to pause ‘brutal’ rate hikes
Compare the Market economic director David Koch has urged the Reserve Bank of Australia (RBA) to pause its aggressive interest rate hikes, warning that mortgage holders are struggling with increased repayments and cost-of-living pressures. Meanwhile, Westpac chief economist Luci Ellis predicts two more rate hikes by year-end, citing persistent inflation risks tied to fuel costs and economic pass-through effects, despite recent inflation easing to 4.2% in April.
The Reserve Bank of Australia (RBA) has raised interest rates three times in 2026, lifting the cash rate from 3.6% to 4.35%, which has added about $342 per month to repayments on the average mortgage of $736,000. Compare the Market’s economic director, David Koch, has warned that these hikes are straining households, requiring borrowers to earn an extra $6,000 annually to afford repayments, forcing lifestyle cuts like reduced holidays and family outings. Koch argued the RBA is not fully grasping the impact of rising rates combined with petrol price hikes and tax uncertainty, particularly for small businesses. He cautioned that further hikes could push unemployment up sharply, as it often lags economic downturns. ‘They’re being crunched, absolutely crunched,’ Koch said, urging the RBA to reconsider its approach before its June meeting, where experts expect rates to hold but remain divided on future moves. Westpac chief economist Luci Ellis, a former RBA official, expects two more rate increases by September, pushing the cash rate to 4.85%, due to persistent inflation pressures. She noted that trimmed mean inflation is rising, with higher fuel costs driving up expenses in sectors like home-building, dining, and postal services. While April’s headline inflation fell to 4.2% from 4.6%, volatility from oil price swings—linked to the US-Iran conflict—and excise changes may reverse gains. Ellis highlighted that second-round effects from fuel costs could sustain inflation above RBA forecasts. The bank has repeatedly stated its commitment to taming inflation, even if it means tighter monetary policy. With oil prices potentially rising again after April’s excise cut expires, economists warn households face further financial strain unless the RBA adjusts its strategy. Ahead of the June rate decision, market predictions are mixed, though most anticipate a pause. Koch’s plea contrasts with Ellis’s hawkish stance, reflecting broader uncertainty over whether Australia’s economy can absorb more rate hikes without deeper economic damage.
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