Reserve Bank governor says further rate hikes possible, but not certain

In a speech to the Economic Society of Australia in Brisbane on Wednesday, Dr Lowe said high interest rates were clearly working to dampen demand.

"Consumption growth is weak, so monetary policy is working," the RBA governor said.

"The question mark is, how much more do we need to do? We've got a completely open mind on that question."

Several updates on the economy later this month are shaping as crucial in helping determine whether rates go higher, including June quarter inflation figures out on July 26 plus June employment and retail sales figures.

Announcing last week's decision to hold interest rates steady, Dr Lowe said "some further tightening of monetary policy may be required".

But on Wednesday the governor said, "it remains to be determined whether monetary policy has more work to do".

He said it was "possible" there may be further tightening, but added that, "whether or not this is required will depend on how the economy and inflation evolve".

The governor's comments came as data indicated the nation's housing supply crisis was far from easing.

Work on new houses dropped 5.5 per cent in the March quarter to be down almost 16 per cent from a year earlier.

While there has been an 11.8 per cent increase in apartment and unit commencements over the same period, this has not been enough to stem the nation's supply problem.

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Australian Bureau of Statistics figures show that, overall, 46,546 dwellings were under construction in the first three months, down 6.6 per cent from the same period in 2022.

Building approvals bounced higher in May but were down almost 10 per cent on an annual basis, adding to concerns the supply of new homes may fall short of demand.

Further complicating the picture, ANZ Bank chief executive Shayne Elliott told a parliamentary committee hearing that a substantial proportion of his customers continued to hold significant savings.

"Our customers, by and large, are faring extremely well," Mr Elliott said. Retail deposit levels are rising."

Despite soaring interest rates, which have risen 4 percentage points in little more than a year, Mr Elliott said there had been only a "modest" increase in the number of borrowers asking the bank for help.

Only 0.6 per cent of home loan repayments were overdue by 90 days or more, the ANZ boss said.

National Australia Bank chief executive Ross McEwan told the committee said his customers were proving to be similarly resilient.

He said NAB had contacted more than 500,000 of its borrowers since interest rates began rising in May last year, but only 14 wanted immediate help.

Though the number experiencing hardship was growing, it remained at pre-pandemic levels, Mr McEwan said.