Unlucky 13th rise for home buyers as Reserve Bank punts on the economy

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Bullock said inflation is now expected to be around 3.5 percent by the end of 2024 and then “at the top of the targeted 2 to 3 percent range” by Christmas 2025.

In other words, according to its own predictions, the RBA is trying to trigger an inflation needle that would be undetectable in a $2.5 trillion economy.

This interest rate increase is therefore about making it clear to consumers, companies and governments that the bank and its new governor will not abandon expectations about possible inflationary pressures. A line has been drawn.

The other key figure in Bullock’s statement was about unemployment.

The bank had expected that the rate hikes would slow the economy so much that the unemployment rate – currently 3.6 percent – ​​would gradually rise to 4.5 percent over the next eighteen months.

She now assumes that unemployment will rise to 4.25 percent. That quarter of a percentage point equates to almost 30,000 additional people keeping a job.

That suggests the RBA has rethought how tight the labor market can be as inflation returns to the target range. It also suggests that the bank believes it can raise rates without causing much more financial pain.

While Bullock’s statement opens the door to future rate hikes, the language is tempered. Now another rate hike will depend on whether upcoming economic data, such as inflation, are in line with expectations. Last month, “some further tightening” of interest rates may have been necessary.

That’s why some economists are already saying the Reserve Bank may have cracked rates for the last time, and predict the next step will be a cut in the second half of next year.


Like other central banks around the world, the Reserve is like a horse running in a different direction on a foreign track. This is unknown territory.

Interest rates have risen extraordinarily for people with some of the largest mortgages in the world. No one can say with certainty that this will work out perfectly.

Soon, the cumulative impact of thirteen rate hikes will bite – and bite hard. At that point, the Reserve Bank will need a bit of luck to go about its business.

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