Australia will dodge a recession as consumers rely on their massive savings pool, and the RBA will lift rates twice more, QIC’s Matthew Peter predicts.
Australia’s massive pool of savings will emerge as the economy’s weapon in defeating any recessionary risk this year, as consumers lean on their cash buffers to meet rising mortgage costs and defy the higher cost of living.
Brisbane-based QIC manages $100 billion in assets and invests on behalf of the state of Queensland. Part of its portfolio works like a superannuation fund where it manages assets of government-affiliated clients. It also invests in real estate, infrastructure and private equity, both in Australia and offshore.
Interbank futures imply about an 82 per cent probability of such a rise, and an 18 per cent chance it will stay on hold at 3.1 per cent. The central bank has lifted rates by 3 percentage points since May 2022, and the full effect on mortgage holders is only just being felt. Peter expects the Fed will raise its benchmark rate close to 5 per cent to rein in inflation, and cut it sharply thereafter to get it back to equilibrium.
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