Mortgage holders have been dealt a fresh blow, as another major Australian bank scraps the idea of interest rate cuts in the foreseeable future after inflation shot up.<\/p>\n
ANZ\u2019s head of Australian economics Adam Boyton said inflation\u2019s rise to 3.8 per cent in the 12 months to October<\/a> effectively killed its previous forecast of rate relief in February.<\/p>\n “We no longer see one final rate cut from the RBA in the first half of 2026, given recent inflation pressures,” Mr Boyton said.<\/p>\n He said the case for further rate cuts was \u201cless clear\u201d as the nation\u2019s capacity for growth was around its potential limit.<\/p>\n Mr Boyton also stressed that it was unlikely the RBA would hike rates in 2026 as the unemployment rate is expected to rise, and labour market set to remain \u201cbalanced\u201d instead of tight.<\/p>\n \u201cAnd we don\u2019t expect Q3\u2019s lift in inflation to be permanent,\u201d he said.<\/p>\n “As a result,\u00a0we expect the RBA to be on an extended hold, with\u00a0the cash rate to remain at its current level of 3.60 per cent.”<\/p>\n While Mr Boyton ruled out a hike, some economists have argued lifting the cash rate will be necessary to stamping out this resurging inflation.<\/p>\n EQ Economics managing director Warren Hogan said the next move would be a hike and predicted the change would arrive mid-next year<\/a>.<\/p>\n \u201cThe market’s not going to price in a rate hike until it’s imminent,\u201d he told Business Now.<\/p>\n \u201cI think we’re more than likely going to be talking about rate hikes by the time we get back from the summer holidays.<\/p>\n \u201cI think May is when you get the first opportunity for a rate hike. The sooner they do it, the less they have to do.\u201d<\/p>\n