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The Reserve Bank is expected to raise interest rates for the tenth time in a row and inflict more pain on already overstretched Australian households.
The central bank will make a decision on raising the cash rate on Tuesday after a series of hikes beginning in May 2022 in a bid to rein in high inflation, which likely peaked in the December quarter at a annual rate of 7.8 percent.
For mortgage holders, another 25 basis point rate hike will further stretch household finances.
Analysis from comparison site Canstar shows another cash rate hike will add $1,051 to monthly payments (compared to April 2022 levels) on the average $500,000 loan with 30 years remaining on the term.
With inflation still well above the RBA’s 2 to 3 percent target band, in recent statements the central bank took a tougher stance on inflation, saying in the February decision that “further increases in inflation rates” would still be needed. interest rates”.
The Australian National University’s RBA shadow council has assigned an 81 percent probability to another rate hike on Tuesday and a 19 percent probability that the bank will hold.
“There are increasing signs that past interest rate increases are working their way into the economy, reflected, for example, in a weakened consumer outlook, but current economic conditions remain relatively benign,” He pointed to the board in the shadow.
They pointed to weaker-than-expected wage data for the December quarter and rising unemployment rate as signs of worsening conditions for consumers.
But indicators of business performance and sentiment have been less conclusive.
“Businesses are doing well thanks to relatively strong consumer spending, but the outlook for the future looks less rosy, presumably reflecting the impact of inflation on household budgets, as well as tighter monetary policy.” they said.
The shadow board said the global outlook was unchanged, with the war in Ukraine and other geopolitical tensions remaining key risks.
After the March decision, most expect the RBA to continue rising, with Commonwealth Bank predicting one more cash rate hike before pausing.
Westpac, NAB and ANZ economists are forecasting two more hikes after the March decision to push the cash rate to 4.1 percent.
-AAP
