RBA announces 10th consecutive rate hike
The Reserve Bank has announced its cash rate decision for March.
At its meeting today, the RBA has decided to increase the cash rate target by 25 basis points to 3.6 per cent.
The rate increase was largely expected, with 93 per cent of Finder’s panel of economists and commentators predicting a rise in the cash rate.
Finder head of consumer research Graham Cooke said after 10 consecutive rate rises, Australians with an average loan size of around $600,000 will be forking out over $13,000 more per year on their mortgage compared to what they were paying a year ago.
“While homeowners deserve a break from the relentless increase in pressure, we can expect ever more hikes from the RBA this year,” Mr Cooke said.
Moody’s Analytics macroeconomist Harry Murphy Cruise said that with inflation remaining bitingly high, the RBA will be forced to keep hiking interest rates.
“While the worst of the inflation pressures are likely in the rear-view mirror, a meaningful price reprieve is still some time away,” said Mr Murphy Cruise.
The RBA will likely hike rates again in April, he said, taking the cash rate up to 3.85 per cent.
He noted that earlier rate hikes are starting to have an effect with unemployment lifting, retail sales volumes going backwards in the December quarter and wage rises lower than expected.
“This should keep interest rates under 4 per cent,” he said.
University of Sydney professor of macroeconomics James Morley said the path of rates will very much depend on inflation numbers.
Mr Morley warned if the inflation number for the first quarter comes in high, it seems guaranteed the RBA will continue to raise rates until they get a lower number for the second quarter.
