Australian households should brace for another interest rate hike in the lead-up to the federal budget, with experts predicting a double cash rate increase is coming next month and in May.All four big banks are forecasting another cash rate rise in May and Oxford Economics Australia’s economist Harry McAuley has also warned there is a high chance that more pain is coming for homeowners.
Australian households should brace for another interest rate hike in the lead-up to the federal budget. (iStock)
“Despite the softer January spending figures, we think another rate hike is on the cards for May,” McAulay said.
“This will see spending patterns diverge between outright homeowners on the one hand, and mortgage holders and renters on the other, resulting in steady but unremarkable spending growth.”
McAulay said the “increased chatter” of another interest rate hike has led to a 0.1 per cent drop in discretionary spending.
January’s spending growth was skewed towards essentials, such as medical visits and car services.
Economists have also warned that a March rate rise is “highly likely”.
Modest yet positive economic growth was reported in yesterday’s quarterly figure. (Louise Kennerley)
CreditorWatch chief economist Ivan Colhoun has predicted another 0.25 per cent interest rate hike during the RBA’s next meeting, slated for March 16-17.
RBA chief Michelle Bullock poured cold water on claims the Reserve Bank would wait until fresh inflation data landed in April before increasing the cash rate, stating that every meeting is “live” with the possibility.
Economists responded swiftly and raised the chance of a March cash rate hike to 33 per cent.
A decision is expected at 2.30pm on March 17 and again on May 5.
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