The Reserve Bank of Australia decided to increase the cash target by 25 basis points to 3.10 per cent last Tuesday.
RBA Governor Philip Lowe said Inflation in Australia is too high, at 6.9 per cent over the year to October.
“Global factors explain much of this high inflation, but strong domestic demand relative to the ability of the economy to meet that demand is also playing a role. Returning inflation to target requires a more sustainable balance between demand and supply,” He said
In this episode, we interview Prof. Jakob Madsen, a Professor of economics at the University of Western Australia to explain to us what is the implication of these increases.
He predicted next year will not be a good year and a year after.
“Oh they're not good times I hate but they're definitely going to go well the thing is they take 1 step at a time because if they give a big shock. It's going to shock the whole economy. It runs down the tube very quickly. They want to get the inflation down at any cost. But it is tough and that means that interest rates have to go up. Inflation may go down. We don't know properly. It will go down but it will stay over at least 5 % the for some time but that means interest rates have to go up there. The reserve bank will continue to increase its interest rate.” He said
In a press conference, Treasurer Jim Chalmers remains confident that state and territory leaders will be able to come to a win-win solution on how to ease the rising price of energy.
Meanwhile, CBA, Nab Bank and Westpac said the standard variable home loan interest rate will increase by 0.25% p.a., effective from 16 December 2022.
NAB Group Executive for Personal Banking Rachel Slade said:
“It’s important for anyone finding the increasing interest rates a challenge to lean on their bank for support.”
CBA Group Executive, Retail Banking, Angus Sullivan said: “We continue to support our customers facing a cost of living pressures through our online budgeting tools, discounts on everyday shopping essentials, and by again lifting the savings rates across some of our most popular deposit products.”
5% official cash rate expects - expert predict