Is another rate rise on the way this week? Mark Bouris and economist Stephen Koukoulas return for their monthly economic breakdown to consider whether the board will keep the official cash rate on hold again at 4.10% this coming Tuesday, the 7th of November.
Join them on Property Insights to unravel some of the current economic conditions in play prior to the Reserve Bank’s potential cash rate increase. Many are predicting another rate hike before the end of the year but what does the economy actually show us? And with big implications for peoples economic well being – is another hike the straw that breaks the camel’s back?
- We’re seeing a mixed response across various economic sectors. Consumer demand and spending are weak due to the cost of living and mortgage rate increases, while Business investment is doing ‘better than okay’ and showing optimism.
- The international economy is also mixed yet seems resilient, with a number of countries with negative GDP continuing to grow. Australia’s lagging around 3 months behind international economic changes which implies that by February GDP, unemployment, and inflation rates will show even greater deescalation.
- Mark and Kouky discuss the new RBA governor’s concerns around the labour market and wage price increase, and suggest that the lower unemployment stays or gets, the more likely we are to see rate hikes. Their analysis indicates that while unemployment is currently below 4%, wages are in the goldilocks sweet spot – even with minimum wage increases in recent months.
- Are the media and big 4 banks right to predict a hike in spite of evidence that inflation is still slowing overall? Australia’s GDP is still too high and recent inflation numbers are not as low as hoped. Mark and Kouky discuss the way factors such as petrol prices and the exchange rate influence inflation calculations.
- ‘They don’t need to hike.’ Mark and Kouky conclude that, in spite of imperfect inflation and unemployment rates, leading indicators suggest the economy is weakening and that inflation will head towards RBA targets in the next couple of quarters – the RBA doesn’t need to hike rates anymore to meet targets.