RBA needs to accelerate the pace of rate hikes
Odds are growing for an eye-watering 75bps hike in August as central banks around the world race to tighten the strings.
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.
A weekly survey showed that consumers now feel as downbeat as they did during a recession in the early 1990s.
The Reserve Bank knows it will have to sharply revise up its inflation expectations as a prelude to a string of interest rate increases to tame prices.
The RBA delivered a surprise 50-basis-point cash rate rise on Tuesday.
The RBA’s decision to speed up rate increases will send a tremor through the housing market, but the move will ultimately reduce the mortgage pain in the long term.
A group of economists including former board member Warwick McKibbin say the first RBA review in decades should be both independent and led by a foreign expert.
The RBA is unlikely to rule out 50-basis point moves in any given month, especially if the inflation outlook deteriorates further.
Original URL: https://www.theaustralian.com.au/author/james-glynn/page/8