Australia to start economic upswing at full employment
Rising inflation and surging rates are a problem, but the outlook will be made infinitely easier by the fact that every worker who wants a job can find one.
Rising inflation and surging rates are a problem, but the outlook will be made infinitely easier by the fact that every worker who wants a job can find one.
The Reserve Bank’s shock-and-awe campaign of consecutive 50-basis-point interest rate increases to cool off inflation is coming to an end.
The darker side of this week’s inflation numbers makes it doubtless the RBA will keep raising rates at speed this year and the next.
Even with inflation growing at its fastest pace in 30 years and rates rising at a fearful speed, the anger directed at the RBA is a bit over the top.
Tinkering with the inflation target now, or even suggesting it could be changed, runs the risk of undermining the RBA’s ability to contain inflation expectations.
The first internal review of the Reserve Bank of Australia since the 1990s comes at the worst time imaginable for the central bank.
Odds are growing for an eye-watering 75bps hike in August as central banks around the world race to tighten the strings.
The reality is the RBA will almost certainly sting homeowners again with a further 50-basis-point rise in interest rates in August.
There are scenarios building that might plunge the resource-rich economy into a deep contraction, and the biggest influence on the outcome will be the central bank itself.
Every mortgage holder should now factor in a further 50-basis-point rise in interest rates in early July, with more to come in the months beyond that.
Original URL: https://www.theaustralian.com.au/author/james-glynn/page/7