Shane Oliver has increased his probability of Australia entering a technical recession to 50 %, which means that the Australian economy must experience two consecutive quarters of negative GDP growth. Oliver identifies the key risk of entering recession stems from the lagged impact of mortgage rate rises, which has led to consumer spending falling as… Continue reading Elephant in the Room
The Reserve Bank of Australia has again paused on raising the official cash rate leaving it unchanged from 4.10 %. In his statement on Tuesday the RBA governor Phillip Lowe stated that he expected Australia’s CPI inflation “will continue to decline, to be around 3.5% by the end of 2024.” An observation by senior APAC… Continue reading The Spanish Solution
The decision by the Reserve Bank to keep the official cash rate on hold at 4.1 % on Tuesday, suggests that the Bank believes it has lifted them enough after 12 near consecutive rate hikes. They again paused to see if their tightening has started to rein in inflation. At face value their rate hikes have… Continue reading RBA on hold again
The relentless monetary tightening cycle by the Reserve Bank of Australia continued, despite economic growth groaning under the strain of prior hikes. Much like the Maroons piling on the pressure on the Blues in the State of Origin on Wednesday night. The economy is demonstrating classic signs of reaching a tipping point and a policy… Continue reading Hard Landing Ahead?
Mortgage stress has reached its highest level since August 2008, with 27.8% of mortgage holders being rated ‘At Risk’ by Roy Morgan following the recent RBA interest rate rise to 4.1%. Roy Morgan considers a borrower to be “At Risk,” if their mortgage payments surpass a predetermined level. This level is traditionally met when 25%… Continue reading Mortgage stress at new heights.
On Tuesday the Reserve Bank of Australia lifted the official cash rate to an 11-year high of 3.85 per cent. The last time Australia experienced a similarly aggressive tightening of monetary policy was also when Ray Price or Mr Perpetual Motion led the Paramatta Eels to a Premiership. Incidentally, this remains their most recent Premiership… Continue reading Time to leave the table.
This week we found out that more than 10 million Australians are facing a large tax rise. The tax hike comes from the removal of the Low- and Middle-Income Tax Offset (LMITO), which last year gave those with a taxable income of less than $126,000 tax relief of up to $1,500. The LMITO was paid… Continue reading Goodbye Low- & Middle-Income Tax Offset
After a record 350 basis points of rate increases, the Reserve Bank of Australia on Tuesday wisely paused their monetary policy tightening cycle at 3.6 per cent. A position that we predicted that the RBA would take in an earlier post. This level also matches their internal scenarios that suggested about 1 in 7 Aussie borrowers,… Continue reading Has the RBA paused the interest rate tightening cycle, or is it permanent?
This week the Reserve Bank Board’s minutes were released from their meeting on Tuesday, 7 March. One of the key points from the meeting was that the Board only considered the case for a 25-basis point increase, discarding both holding interest rates or a 50-basis point increase. The minutes noted that “Members agreed to reconsider… Continue reading RBA to pause in April
The Reserve Bank of Australia (“RBA”) Board meets tomorrow and, it’s highly likely that the Board will raise the official cash rate by 25 basis points from 3.10% to 3.35%. If we look at the Board’s December decision to raise interest rates, they said the following. “The Board expects to increase interest rates further over… Continue reading Interest rates set to rise