Next week Australian households will be looking closely at the RBA and waiting to see what interest rate increase they will announce.
With the economic growth and wages data out this week, ANZ has joined Westpac calling for a 0.4% increase to 0.75%, while CBA and NAB have kept to their call for a 0.25%. Stephen Koukoulous has called for a 0.65% increase next week, follow-up by two rounds of 0.5% increases. Some are even calling for a 0.85% increase in the official cash rate next week.
These increases are a complete sea change to monetary policy in recent years. Prior to the raising of the cash rate in May 2022, the last such increase was in November 2010 – i.e., a 12 year gap which for many Australians is a lifetime ago (especially for new entrants to the housing market).
Market economists are now calling for aggressive moves from the RBA given that the RBA kept official interest rates too low for too long.
Importantly, no one at the RBA has a precise understanding as to what the impacts will be interest rate increases will be as outlined in the minutes of the RBA board meeting. Even, with respect to the US Federal Reserve, there is significant uncertainty as to what are the impacts of their current monetary tightening campaign.
For many people within the establishment, there is little recognition and acknowledgement of Martin North’s DFA dataset. Time will ultimately be the judge as to how many and how much interest rate rises will households be able to absorb before it becomes too much to bear.
Go to the Walk The World Universe at https://walktheworld.com.au/
Find more at https://digitalfinanceanalytics.com/blog/ where you can subscribe to our research alerts
Please consider supporting our work via Patreon: https://www.patreon.com/DigitalFinanceAnalytics
Or make a one off contribution to help cover our costs via PayPal at: https://www.paypal.me/MartinDFA
We also can received bitcoins at: 13zBL1oRib9VJu8Uc9zUGNhxKDBBgUpDN1
Please share this post to help to spread the word about the state of things….
Caveat Emptor! Note: this is NOT financial or property advice!!