At its last meeting, the Reserve Bank board shocked just about everyone and left interest rates on hold. But has it left it too late?

At its last meeting, the Reserve Bank board shocked just about everyone – except itself – and left interest rates on hold.

When the board next meets on August 11-12, it will belatedly cut the cash rate, providing welcome relief for mortgage-holders, businesses and consumers.

But has it left it too late?

Shoppers are closing their purses and wallets. Following a sustained period of high interest rates that the RBA itself concedes are “restrictive”, figures released on Friday confirm that real retail sales per person for the June quarter of this year fell by 0.1 per cent. This follows a contraction of 0.4 per cent per person in the March quarter.

The Reserve’s twin mandate is to keep inflation in the band of 2-3 per cent a year and to achieve full employment.

Following Covid-related supply-chain problems, the inflation rate leapt to 7.8 per cent towards the end of 2022. It has been falling ever since –

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