September 05, 2022 20:30 PM
Twenty-seven of 30 economists polled predicted the bank would raise rates by 50 basis points to 2.35% at its meeting on Tuesday.
[Global Market Report]The Reserve Bank of Australia will hold its monetary policy meeting on Tuesday, and a new survey shows that most economists expect the bank to continue to raise interest rates sharply at the meeting, counting on strong consumer demand to help the economy digest its rapid The impact of interest rate hikes, while temporarily ignoring the impact of the general downturn in the real estate market.
Twenty-seven of 30 economists polled predicted the bank would raise rates by 50 basis points to 2.35% at its meeting on Tuesday. This will be the fourth consecutive rate hike by the RBA by 50 basis points.
Like their global counterparts, policymakers in Australia are trying to keep inflation from running out of control. They expect the A$10 trillion ($6.8 trillion) property market will avoid forced sales as many mortgage holders make early repayments and high employment rates allow them to deliver on their promises.
Diana Mousina, senior economist at AMP Capital Markets, said: “Usually in a tightening cycle, the RBA will raise rates a few times and then wait and see. But they just don’t give themselves any time to look at the data, Because they worry regarding inflation being too high.”
Consumer prices in Australia rose 6.1% in the second quarter, double the upper limit of the RBA’s 2-3% target, and are expected to peak at just under 8% later this year. RBA Governor Philip Lowe will deliver a speech on Thursday titled “Inflation and the Monetary Policy Framework”.
The Commonwealth Bank of Australia said it would take regarding three months for the RBA rate hike to affect households. This suggests consumers are only now feeling the impact of the initial rate hike. In addition, regarding one-third of mortgages are fixed-term, further shielding them from the crunch. That helps explain why Australian consumers are still spending heavily.