Further rate rises look increasingly possible, but would they fix inflation?

  • 📰 abcnews
  • ⏱ Reading Time:
  • 67 sec. here
  • 8 min. at publisher
  • 📊 Quality Score:
  • News: 47%
  • Publisher: 83%

Michelle Bullock News

Inflation,Interest Rates,Home Loans

Rate rise after rate rise should have sent the economy into a tailspin, but the RBA isn't fighting a textbook case of inflation.

After 13 interest rate hikes that sent home loan repayments soaring, we still have an inflation problem.

But the jobs market, while slackening, remains incredibly strong, real estate markets are booming and inflation is still travelling at a dangerously uncomfortable speed.But since then, it has refused to budge with the latest numbers indicating prices are still rising at about 3.6 per cent a year.The solution, according to a range of armchair critics, is that Michele Bullock and her team need to whack the economy again with a couple more rate increases, just for good measure.

Why? Because there are a large number of households, mostly older and well-established with little or no debt, that are merrily sailing through the entire inflation firestorm and spending like there's no tomorrow. In the aftermath of the pandemic, she explained, the rapid influx of new workers helped alleviate labour shortages, adding to supply. A good thing, she explained.A surge in home loan hardship requests and a record number of quick resales are two signs that Australia is still perilously close to the edge of the mortgage cliff.But the arrival of more than half a million people last calendar year has put pressure on the economy, particularly housing.

Power bills have been another major contributor, as have insurance costs. Both are related to climate change. Again, no amount of rate hikes will fix that.

 

Thank you for your comment. Your comment will be published after being reviewed.
Please try again later.
We have summarized this news so that you can read it quickly. If you are interested in the news, you can read the full text here. Read more:

 /  🏆 5. in ERROR

Finance Finance Latest News, Finance Finance Headlines

Similar News:You can also read news stories similar to this one that we have collected from other news sources.

RBA interest rates: Treasurer Jim Chalmers’ budget is ‘expansionary’, says internal RBA analysisLabor’s third budget adds more money into the economy this year than it takes out, making it ‘slightly expansionary’, according to RBA research.
Source: FinancialReview - 🏆 2. / 90 Read more »

Reserve bank leaves interest rate on hold at 4.35% with borrowers left waiting for reliefRBA keeps cash rate steady amid stubborn inflation and an economy that has all but stalled
Source: GuardianAus - 🏆 1. / 98 Read more »