Interest Rate Outlook
Despite inflation slowing more than expected, consensus is that the RBA will look to increase rates by another .25 basis points at it’s upcoming meeting. This would bring the cash rate to 3.1%. The fast rise even saw the Governor of the RBA, Philip Lowe apologise for his comments around rates staying low ‘for years’ ahead.
We are currently seeing home loan variable rates around the 4.4-4.7% mark from majors for residential purchases.
Inflation slowed to an annual pace of 6.9% in October. This was under most expectations and questions whether the peak of 7.75% will hit in December as predicted. Gas and fuel prices have eased slightly but wages and prices of other goods continue to stay high.
Interestingly the government has announced a potential price cap on gas – an unprecedented market intervention. It will be interesting to see more details on this as it comes out.
Depending what you read, house prices may have stopped falling or expected to fall another 10%. Whilst prices have drifted lower for seven months, the rate has slowed and we could be seeing a bottom. A case against this is the amount of loans that will start switching from fixed to variable and a jump in repayments. This jump is likely to shock households whose disposable income has not increased.
China’s official stance on COVID is elimination. Markets are expecting this to change but again no clear signs from an economy that has such a major impact on the rest of the world.
Upcoming Lodgements Dates for December:
- 21 December – Monthly IAS for Employee Wages