Westpac\u2019s chief executive Anthony Miller has sounded the alarm Australia could slide into a recession as inflationary pressures and global tensions weigh on the cost of living.<\/p>\n
Appearing on the ABC\u2019s That\u2019s Business podcast earlier in the week, Mr Miller warned the country needed to be prepared for the \u201cchance\u201d of a recession occurring – complicated by events in the Middle East and the subsequent pressure placed on the Reserve Bank.<\/p>\n
\u201cI think we need to acknowledge circumstances have changed so much that a recession… there is a chance,\u201d Mr Miller told host Alan Kohler.<\/p>\n
Oxford Economics has already warned the global economy could feel the impacts of soaring oil prices and a prolonged downturn, if the Middle East conflict extends for another two months.<\/p>\n
The company warned in the worst case scenario, the price of Brent oil would peak at US$190 ($A276) a barrel by August – which would drive the world into a global downturn.<\/p>\n
The Reserve Bank has already hiked Australia\u2019s official cash rate up another 25 basis points, from 3.85 to 4.10 per cent – the second in just two months.<\/p>\n
Mr Miller said told the podcast another rate rise would \u201creturn us to where we started when there was a rate reduction program\u201d – explaining it \u201cwouldn\u2019t be any worse\u201d than 2025.<\/p>\n
\u201cThe world has moved, and continues to move, in strange and unusual ways,\u201d he said.<\/p>\n
\u201cOther stressors are coming through for consumers.<\/p>\n
\u201cWe would anticipate after the next interest rate rise – if there is another needed – that would go some ways to slowing the economy in the way the Reserve Bank wants, to deliver the reduction in demand and the pullback on inflationary challenges.\u201d<\/p>\n
On Thursday, Westpac joined the other major banks in hiking fixed rates by 0.45 percentage points.<\/p>\n
The move means none of the big four banks offer a fixed rate under 6 per cent – with NAB offering the lowest at 6.04 per cent for a 1-year term.<\/p>\n
Canstar.com.au insights director Sally Tindall said the move showed just how quickly the rate cycle had shifted.<\/p>\n
\u201cWith more than 60 lenders lifting fixed rates since the RBA\u2019s March meeting, it\u2019s clear the market is increasingly bracing for the possibility of further tightening, as global tensions start to feed into costs here at home,\u201d she said.<\/p>\n
\u201cWestpac\u2019s updated cash rate forecast points to more rate hikes on the horizon, reinforcing the view that even tougher times are ahead.<\/p>\n
\u201cWhile further rate hikes could be just around the corner, this is not set in stone. If households and businesses wind back too far, the economy could easily stall, jobs could be at risk and the RBA could be forced to change course again.\u201d<\/p>\n