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RBA Governor Michelle Bullock.<\/p>\n
Economists are now backing in another rate hike as soon as next month after the Reserve Bank boss called it a \u201clive\u201d possibility at the March meeting.<\/p>\n
CreditorWatch\u2019s chief economist, Ivan Colhoun, is pricing in another 0.25 per cent interest rate rise at the RBA\u2019s next meeting in two weeks, changing his view after hearing Michele Bullock\u2019s comments.<\/p>\n
\u201cAn increase at that meeting is now my base case,\u201d Mr Colhoun said. \u201cThe March RBA meeting was very under-priced. I\u2019m changing my view and now consider a further 0.25 per cent interest rate rise in March to be highly likely.\u201d<\/p>\n
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Reserve Bank of Australia Governor, Michele Bullock. Picture: Martin Ollman.<\/p>\n
RELATED: How Middle East conflict could force the Reserve Bank to raise interest rates<\/a><\/p>\n Mr Colhoun said the fact that inflation was still above target and only forecast to return to the target band of 2 to 3 per cent by mid-2027 was among his reasons for predicting another rate rise so soon.<\/p>\n A quarter of a per cent rise in March would take the official cash rate from 3.85 per cent to 4.1 per cent.<\/p>\n \u201cBullock also clarified that her use of the word patient last week was in relation to the Board needing to collect more data,\u201d he said. <\/p>\n Inflation and employment are weighing on the economy. Picture: John Appleyard.<\/p>\n \u201cSince the February Board interest rate rise, the January CPI has confirmed the RBA\u2019s above forecast assessment for inflation, while the unemployment rate has again printed at 4.1 per cent, a level the RBA describes as a little tight.<\/p>\n \u201cFurthermore, in the speech, the Governor concluded that \u2018economy-wide capacity pressures in the economy are also playing a role and, overall, we think underlying demand in the economy is further from its supply potential than we had assessed six months ago\u2019.\u201d<\/p>\n Mr Colhoun is not the only one who is now forecasting a rate hike this month, instead of May.<\/p>\n Homeowners are bracing for another interest rate rise in March.<\/p>\n Coolabah Capital economist Kieran Davies said it was clear the governor\u2019s messaging had changed.<\/p>\n \u201cWe narrowly favour the RBA raising rates again this month, or, failing that, a number of policymakers voting to raise rates,\u201d Mr Davies said.<\/p>\n MORE: How two 20-something Aussie YouTubers built an $11m property empire<\/a><\/p>\n<\/p>\n
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