Reserve Bank hints at possible pause to interest rate hikes

Homeowners who are concerned about interest rate hikes can breathe a sigh of relief as the Reserve Bank governor, Philip Lowe, has hinted that a pause may be on the horizon.

Despite inflation remaining high, Lowe stated that the bank would be open to a pause if employment figures, and monthly inflation data supported it.
The RBA has raised interest rates from 0.1 percent to deal with the high inflation rate of 7.8 percent, which is well above the bank’s target of between 2 and 3 percent. Lowe expects inflation to fall back to the target by 2025, but he argued that further rate rises could be necessary to achieve this goal.

However, the board is “closer” to a rate pause, and the decision will depend on the data and the bank’s assessment of the economy’s outlook. The Treasurer, Jim Chalmers, also expressed optimism that inflation was beginning to moderate, but he acknowledged that it had been stubborn and higher for longer than expected.

The RBA forecasts that mortgage repayments will consume 9.5 percent of household disposable income later this year, and consumer spending is already showing signs of slowing due to the aggressive rate cycle.

Caine Hunter

Sales Agent

caine@mcfallreealestate.com.au