CPA Australia says rate hold offers only temporary relief as cost pressures persist

CPA Australia has described the Reserve Bank’s decision to leave interest rates unchanged as a short-lived respite for borrowers, while warning that households and small businesses are still facing ongoing financial strain.

The accounting body’s business and investment lead, Gavan Ord, said the decision to pause further increases would be welcomed, but it does not materially reduce the wider pressures confronting consumers and businesses.

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

He said businesses and consumers continue to contend with elevated costs, persistent inflation across a range of goods and services, volatile fuel prices and weak consumer sentiment.

Ord also said measures announced in the federal budget had added to uncertainty, particularly around how the proposed changes would work in practice and whether they could be applied consistently.

“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.

He said continued increases in business expenses were likely to keep feeding through to end 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,” Ord said.

CPA Australia said the current conditions highlight the need for governments to prioritise longer-term reform aimed at improving the business operating environment.

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

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

Ord said stronger productivity and lower compliance expenses would provide more meaningful support for business resilience than temporary 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 also called on small businesses and households to seek advice early to better manage financial risk and prepare for continued 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,” Ord added.