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 and uncertainties 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 many goods and services, fuel costs remain volatile and consumer confidence continues to be subdued.”

Mr Ord added that the proposed tax changes from the Budget has created real uncertainty about how they will operate in practice and whether it can be applied with consistency and confidence. 

“The proposed changes to capital gains tax and trusts in last month’s Federal Budget have added uncertainty to an environment where economic confidence remains fragile,” Mr Ord said.

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 to consumers. We expect continued cost pressures at the checkout as 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 businesses.

“What businesses need 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.

“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,” Mr Ord added.

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Adrienne Biscontin
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