How Long Will Rate Hikes Last?
Stephen Koukoulas is an Australian economist and financial expert who joins us each month on Property Insights. With a career spanning 30 years across a variety of distinguished roles in the finance and government arenas, Koukoulas is known for his frank analysis and on-point commentary around topics such as monetary policy, inflation, housing market, and employment.
This week on Property Insights, Stephen joins Mark again to offer more insights and perspectives on current trends in Australia’s economy. As the RBA shocked the many experts and mortgage holders in May with another interest rate increase, the one thing that concerns both Mark and Stephen is how long will rate hikes last?
Key takeaways:
- While inflation is still high, analysis suggests the decreases observed over recent months will continue.
- The RBA Governor’s address to parliament suggests rates are likely to continue to increase, with Australian markets not yet at projected goals. Rates will hold for a while yet.
- The impacts of ongoing rate increases will continue to punish mortgage holders more than others, with Bouris and other economic commentators foreshadowing a further weakening of the small business sector and labour markets.
- The housing market hike remains an area of concern with a variety of factors driving prices up despite inflation remaining stubbornly high and interest rates increasing at record levels.
- Koukoulas and Bouris both believe the need for ongoing rate hikes is lessening. Koukoulas breaks out his monetary policy checklist, which indicates that many of the factors influencing the RBA’s decision have shifted towards a neutral stance due to factors such as wage price index, house prices, and global economic risks.
- The question on the minds of many: “How long will the RBA hold the rate at where it currently is? Or if they do one more increase, how long are they going to hold it? Because one thing is for sure, they’re not going to turn around overnight and start cutting rates.” – Mark Bouris.
