Comments attributable to e61 Institute Research Director Dr Gianni La Cava:
“The RBA has cited growth in household spending as a factor prompting it to raise interest rates to combat inflation. But our research has shown that raising rates may not have a large impact on consumer spending in the near term.
“Using aggregated, consented and de-identified bank data, we found that when the RBA hiked rates by 4.25 percentage points over 2022 and 2023, people with variable mortgages barely changed their spending habits despite payments rising by $14,000 a year on average.
“This was because they could mostly finance the extra payments from large savings held in offset and redraw accounts. Those savings absorbed the shock, letting many households preserve their lifestyles despite higher interest costs.
“In late 2025 households still had significant buffers in their offset and redraw accounts, with 40% of mortgage holders holding enough savings to make minimum payments for two years.
“This indicates that the latest interest rate rise will likely have a limited impact on spending through the cash flow channel.
“Other channels of monetary policy, such as the exchange rate or housing prices, are likely to matter more for spending and inflation.”
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