{"id":923553,"date":"2026-10-10T23:00:13","date_gmt":"2026-10-10T23:00:13","guid":{"rendered":"https:\/\/www.newsbeep.com\/au\/923553\/"},"modified":"2026-10-10T23:00:13","modified_gmt":"2026-10-10T23:00:13","slug":"australia-recession-risk-why-a-november-rba-rate-hike-could-push-economy-to-the-brink","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/au\/923553\/","title":{"rendered":"Australia recession risk: Why a November RBA rate hike could push economy to the brink"},"content":{"rendered":"

The last time Australians<\/a> were this miserable about their finances<\/a>, the country was in the grips of a recession.<\/p>\n

The nation may not be in one right now, but with how hard some households are struggling, you\u2019d be forgiven for not knowing it.<\/p>\n

\"A<\/p>\n

Questions about possible recession fears have begun to swirl around the Australian economy.\u00a0Glenn Campbell<\/p>\n

It begs the question: is another recession on the way?\u00a0<\/p>\n

Experts say it\u2019s unlikely, but far from impossible.<\/p>\n

Unemployment is still at historically low levels, and the overall economy is ticking along, albeit slowly, having consistently recorded positive GDP growth since the start of 2021.<\/p>\n

However, recent sentiment data<\/a> shows households are already at breaking point.\u00a0<\/p>\n

Consumer confidence has plunged to levels not seen since the early 1990s recession, as the Westpac\u2013Melbourne Institute index fell 4.7 per cent to 80.4 for October.<\/p>\n

Figures were particularly grim following the cash rate lifting to 4.6 per cent \u2013 when looking solely at respondents surveyed after the RBA\u2019s decision on September 29, the index plummeted to 67.2.<\/p>\n

Australia Institute chief economist Greg Jericho told nine.com.au the country can still dodge a recession \u2013 if borrowing costs stop climbing.<\/p>\n

\u201cNo, but should interest rates go higher, the risk of one is increased,\u201d he said.<\/p>\n

\"\"<\/p>\n

Michele Bullock said last month\u2019s rate rise had to happen to bring inflation down.\u00a0Louie Douvis<\/p>\n

Australia\u2019s big four banks are divided over the Reserve Bank\u2019s next move, but ANZ and Westpac predict another 0.25 percentage point hike in November.<\/p>\n

None of the major lenders are predicting a rate cut until the second half of next year.<\/p>\n

Jericho warned unemployment figures are already showing trouble, with the seasonally adjusted jobless rate rising 0.6 percentage points since January.<\/p>\n

\u201cThat is not a sign of a strong labour market, regardless of the actual level of unemployment,\u201d he said.<\/p>\n

He said unemployment reaching five per cent within the next six months would put Australia on the brink of recession.<\/p>\n

\"Adelaide,<\/p>\n

Consumer confidence is in the doldrums right now.\u00a0AAP Image\/David Mariuz<\/p>\n

Following the RBA\u2019s last rate hike, Governor Michele Bullock was asked whether a recession would be needed to finally put a lid on Australia\u2019s persistent inflation problem.<\/p>\n

She said it\u2019s not what the central bank expects, but could eventuate. <\/p>\n

\u201cI hope it\u2019s not needed,\u201d she said. <\/p>\n

\u201cAre there scenarios in which it might have to happen that way? I guess possibly. <\/p>\n

\u201cAnd the scenario that I\u2019m thinking of there is if inflation expectations get away from us\u2026<\/p>\n

\u201cIf that gets away, then that is a circumstance in which I think you might need to have quite a dramatic slowdown in the economy to [control inflation] \u2013 and that\u2019s our worry.\u201d<\/p>\n

She explained that while Australia\u2019s unemployment rate remains historically low, the RBA is trying to bring inflation under control without triggering widespread job losses.<\/p>\n

\u201cJob losses, I don\u2019t like the idea of job losses,\u201d she said. <\/p>\n

\u201cWe\u2019ll do what we have to do to get inflation down because we need to. But if we can avoid massive job losses and a massive increase in the unemployment rate, that is a really important thing to be able to try and do.<\/p>\n

Ultimately, Bullock said that tackling inflation was essential to avoid greater economic damage.<\/p>\n

\u201cIf we don\u2019t address this, inflation will get worse, and interest rates will have to be higher, and the economy in a worse position in order to address that,\u201d she said.<\/p>\n

In its snapshot of Australia\u2019s dire consumer confidence, Westpac found soaring living costs and mortgage repayments, rather than job losses, are behind the pessimism.<\/p>\n

Petrol prices have climbed almost 25 per cent since the start of the year thanks to the war in Iran, and more than 80 per cent of surveyed consumers expect mortgage rates to increase again.\u00a0<\/p>\n

While global oil prices have added to inflation, Jericho argues further interest rate hikes risk hurting households without addressing the overseas factors driving up essential costs.<\/p>\n

Instead, he says the government should cushion families against the cost of essentials, citing energy subsidies and halving the fuel excise.<\/p>\n

\u201cYes, this would increase the budget deficit \u2013 however, this could easily be covered by taxing gas exports at 25 per cent. <\/p>\n

\u201cThat would raise around $17 billion a year.\u201c<\/p>\n

The information provided on this website is general in nature only and does not constitute personal financial advice. The information has been prepared without taking into account your personal objectives, financial situation or needs. Before acting on any information on this website you should consider the appropriateness of the information having regard to your objectives, financial situation and needs.<\/p>\n","protected":false},"excerpt":{"rendered":"The last time Australians were this miserable about their finances, the country was in the grips of a…\n","protected":false},"author":2,"featured_media":923554,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[64,63,99],"class_list":["post-923553","post","type-post","status-publish","format-standard","has-post-thumbnail","category-business","tag-au","tag-australia","tag-business"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/923553","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/comments?post=923553"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/923553\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media\/923554"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media?parent=923553"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/categories?post=923553"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/tags?post=923553"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}