RBA rate hike: experts say 'the end is in sight'
The RBA surprised experts by hiking the official interest rate today.
After a brief reprieve in April with a hold on the rise in the cash rate the RBA is back in full force today hiking rates by a further 0.25 per cent hike today, bringing the official cash rate to 3.85 per cent.
Before the announcement most experts surveyed about which was the RBA was likely to go this month were split evenly between another hold or a hike, here's what some said about the decision to raise the rate again for the 11th time in just 12 months.
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Eleanor Creagh, PropTrack Senior Economist said “Together with the lift in employment seen in the most recent update on the Labour Force, the labour market remains tight. This gave the RBA headroom to raise the cash rate further."
Creagh also said that for mortgage holders the end of more cash rate raises will be sooner than later.
"The end is in sight. The bottoming process will likely continue, with the bounce in home prices firming and values stabilising as uncertainty eases," she said.
"A home shortage exacerbated by high construction costs and industry challenges will also underpin values as the population grows."
Tim Lawless, CoreLogic Research Director also believed the decision today was always going to be line ball, however he said that the decision to lift rates today is likely to be the last.
"Today’s interest rate decision was always going to be a line ball; however, the 25 basis point lift is likely to be the last in what has been the most rapid rate hiking cycle on record," Lawless said.
"Although inflation has been trending lower since peaking in the December quarter 2022, today’s rate hike reflects the RBA’s uncertainty about how ‘sticky’ inflation might be amid persistently tight labour markets and new evidence that housing prices have moved through their low point.
"Although the RBA didn’t touch on the recent more positive housing trend, the statement following the meeting highlighted the rapid drop in housing prices since rate hikes commenced could be a factor in slowing household spending (alongside high interest rates and high cost of living pressures)."
Angela Jackson, Impact Economics and Policy "The latest inflation figures will provide enough justification for the RBA board to move again on rates, with services inflation in particular likely to weigh heavily on their decision."
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