Growth is expected to slump to its lowest level in the three decades outside the pandemic as rising mortgage rates and high taxes batter household budgets
Economic growth is expected to slump to its lowest rate in the three decades outside the pandemic as rising mortgage rates and high taxes batter household budgets.
national accounts, down from its previous forecast of 1.2 per cent and below the current rate of 2.3 per cent.Louie Douvis The near-term growth downgrade, included in an otherwise little-changed set of forecasts, comes just days after outgoing RBA governor Philip Lowe announced the cash rate would be left on hold at 4.1 per cent amid signs inflation is easing.as markets price a 40 per cent chance of no further rate hikes.
“It is possible that the RBA tightening cycle is over – and we note others coming to this view – but we think it is too soon to reach this conclusion.”Giving the RBA reason to pause are clear signs 12 interest rate rises are causing a sharp slowdown in consumer spending. Aside from high rates, the central bank noted the increasing tax burden caused by bracket creep was also weighing on household incomes, more than offsetting the wage gains delivered by the tight labour market.
The statement also showed the RBA considered increasing the cash rate to 4.35 per cent at its most recent meeting, amid concerns services sector inflation could remain high due to the strength of the jobs market.
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