The Reserve Bank’s decision to lift the cash rate to 0.35 per cent reflects the interrelated challenges of rising inflation, supply chain bottlenecks, and acute labour shortages faced by businesses across the country.
“The Reserve Bank’s decision to raise the cash rate for the first time in more than a decade is not only indicative of the building inflationary pressures on cost of living, but also reminds us that the cost of doing business is also increasing,” ACCI chief executive Andrew McKellar said.
“The Reserve Bank is independent of the government and must make economic decisions as it sees them. With interest rates at extraordinarily low levels for the past few years, it was expected that the RBA would begin the process of tightening monetary policy.
“Having survived the pandemic, small business owners are now confronted with rising input and labour costs, forcing businesses to raise prices or absorb higher costs within already thin margins.
“Congested supply chains, exacerbated by the conflict in Europe and lockdowns in China, are continuing to drive up the cost of everything from washing machines to microchips, with small businesses bearing the brunt of these disruptions.
“Businesses are already facing the worst labour and skill shortages in almost 50 years. The RBA’s forecast that the unemployment rate will further decline to around 3 ½ per cent by early 2023 will stretch an already tight labour market.
“According to recently released ABS data, 57 per cent of all businesses have had the cost of doing business increase more than usual in the last three months. As such, the overriding priority for the next federal government is to pull all the levers it can to address the supply side constraints that are driving up inflation and holding back the economy.
“Until we see some of those external supply chain problems ease, until we get more workers coming back into the labour force, and until adjustments are made to monetary policy, inflationary pressures are likely to remain for some time.