Rate hold offers little relief as cost pressures continue to bite

CPA Australia says the Reserve Bank’s decision to hold interest rates will provide a brief reprieve for borrowers but warns that small businesses and households remain under sustained financial pressure.

Gavan Ord, Business and Investment Lead at CPA Australia said while a pause in rate rises was welcome, it does little to alleviate the broader cost burdens facing Australian businesses and consumers.

“A hold on interest rates will be welcomed by many businesses and households, especially those who are already stretched by higher borrowing costs,” Mr Ord said.

“However, the reality is that cost pressures remain high – inflation is still persistent across essential goods and services, fuel costs remain volatile, and consumer confidence continues to be subdued.”

Mr Ord said small businesses, particularly those with high transport and fuel dependency, continue to face a challenging operating environment.

“Fuel isn’t optional – it’s fundamental – and when prices rise, costs flow through immediately,” Mr Ord said.

“For transport, trades, agriculture and regional businesses, fuel is one of the largest and most unpredictable expenses. Combined with higher interest rates and weaker demand, many are operating with very little buffer.”

CPA Australia said the RBA’s decision comes at a time when economic confidence remains fragile, with households reducing discretionary spending and businesses delaying investment.

“Many businesses would have been hoping for a clearer signal that conditions are easing, instead we’re seeing a holding pattern at a time when both households and businesses are still dealing with significantly higher costs than they were even 12 months ago.”

Mr Ord warned that ongoing cost pressures are likely to continue flowing through to consumers.

“When businesses face sustained increases in operating costs, those increases are inevitably passed on. We expect continued cost pressures at the checkout as small businesses try to balance rising inputs with maintaining viability,” Mr Ord said.

CPA Australia said the current environment reinforces the need for governments to focus on long-term reforms to improve operating conditions for small businesses.

“What small businesses need most is decisive government action to reduce red tape and improve the overall business environment,” Mr Ord said.

“Removing unnecessary regulatory burden helps businesses focus on growing, employing people and serving customers.”

Mr Ord said improving productivity and reducing compliance costs would do more to support business resilience than short-term measures.

“Short-term relief can help, but it won’t fix a system where businesses are dealing with persistent cost pressures and regulatory complexity,” he said.

CPA Australia is also urging small businesses and households to seek professional advice early to manage financial risk and plan for ongoing uncertainty, while also calling on governments to support greater access to professional advice.

“Businesses and individuals concerned about managing financial pressures should speak with a professional accountant who can help businesses plan, manage risk and navigate changing economic conditions.

“Incentivising small businesses to seek professional advice would strengthen resilience and improve long-term outcomes during periods of economic uncertainty,” Mr Ord added.